In addition to traditional asset management products, such as mutual funds, so called alternative investments gradually grew in prominence. The main alternative investment products are hedge funds and funds of hedge funds, but they also include private equity and venture capital funds (Figure 0.1).

Alternative investments are characterized by a low correlation with traditional investments. Since the first hedge fund was launched in 1949 by Alfred Winslow Jones, the hedge fund industry has grown impressively reaching the size of $1.3 trillion and 8000 hedge funds. Often hedge funds are responsible for a big slice of the daily trading volumes of financial markets and they are counted among the best clients for brokers, given the level of trading fees they generate.