Hedge funds reportedly have served as willing buyers of these riskier positions, and we are all aware of their phenomenal growth. Now, more than 4,000 hedge funds hold assets of about $ trillion.
As important as the participation of hedge funds, the derivative products themselves allow credit risk to be hedged, which has the beneficial effect of further increasing the pool of other investors as well. The increase in financial product and provider innovation appears to be quite persistent; future trends, however, are likely to be significantly influenced by legal, regulatory, and other public policies.