Hedge funds are private collective investment vehicles for the very rich and, more recently, entities like university endowments, pension funds and insurance companies. They are designed to make money – and the more of it the better – which they do by taking positions on perceived price discrepancies in financial markets, although they have widely varying appetites for risk. They are institutions that tightly guard their privacy, which, combined with the fact that they are largely exempt from regulation, means that very little is known about them. Along with other institutions that sometimes engage in activities similar to them – like the proprietary trading desks of banks and securities companies – they are also called ‘highly leveraged institutions’ (HLIs), although this term can be misleading since they vary substantially in their use of credit. They are managed by some of the brightest and most creative people in the finance industry.