The world of financial markets and investments is rife with risk and reward. This is particularly true for hedge funds, sophisticated investment vehicles that are typically used only by experienced investors and firms. They are named for the fact that investors ‘hedge,’ or attempt to protect their funds against volatile swings in the markets. But how are these portfolios managed? And are managers protecting and optimizing these funds as well as they should be? Seth Berlin, Principal Strategist at Performance Thinking & Technologies, a company that helps asset managers with investment operations, recently tackled these questions when working with a hedge fund client. With the help of @RISK and RISKOptimizer software, Berlin was able to create a quantitative model that uses simulation to optimize a hedge fund’s portfolio.