# kaal:claim:2748096-006

**Claim.** Because hedge fund losses are absorbed directly by a large and dispersed body of investors and their equity capital, private fund advisers are unlikely to trigger a systemic event, and their activity may even reduce market volatility.

**Type.** mechanism  **Support.** evidenced

**Holds when.**

- applies to funds financed by investor equity rather than short term debt

**Source quote.**

> But some research suggests that private fund advisers are unlikely to trigger a systemic event because losses in hedge funds are directly absorbed by the multitude of investors and their equity capital and may actually reduce market volatility

**From.** Wulf A. Kaal, Timothy A. Krause, *Hedge Funds and Systemic Risk* (2016), THE DEBATE ON HEDGE FUNDS' SYSTEMIC RISK, page 3

**Cite as.** Wulf A. Kaal, Timothy A. Krause, Hedge Funds and Systemic Risk (2016). SSRN: https://ssrn.com/abstract=2748096

**Verify.** sha256 of source PDF `8f30260f2c1db728b45c4f3b9b7c64358cf9d3217277bc3c63a910c32f87b508` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20and%20Krause%20-%202016%20-%20Hedge%20Funds%20and%20Systemic%20Risk.pdf

**Topics.** private-funds, systemic-risk, risk-and-incentives, economics

**Keywords.** hedge-funds, systemic-risk, loss-absorption, market-volatility

**Related claims.**

- contests: https://wulfkaal.github.io/claims/2470008-006

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.