The same investing techniques can be used to exaggerate, or leverage, risk in hopes of making outsized returns.

Open only to institutions and the wealthy, hedge funds offer sophisticated models of risk, access to the best financial minds and the chance for outsized returns.

The lure of hedge funds, of course, is not supposed to be the high pay but the outsized returns.

Third, an investor may want to sell if a fund manager who has delivered outsized returns decides to leave.

The loss reached that staggering level because $12 billion was borrowed to add leverage in a quest for outsized returns - compounding the risk.

Those expectations remain sky-high, thanks to years of outsized returns.

The appeal is that hedge funds can bring outsized returns for which managers are richly awarded in fees.

Mr Buffett warned that the outsized returns experienced by technology investors during 1998 and 1999 had dulled them into complacency.

Not surprisingly, Mr. Rosenfeld's hope is to produce outsized returns.

And hedge fund managers, seeking outsized returns, often do that with borrowed money, adding immensely to the risk.