Investing in hedge funds can increase the diversity of the portfolio, and investors can reduce the overall risk exposure of the portfolio. Hedge fund managers use specific trading strategies and tools to reduce market risk and obtain risk-adjusted returns, which is consistent with investors' expected risk level. The return of an ideal hedge fund has nothing to do with the market index. Although "hedging" is a means to reduce investment risks, hedge funds, like all other investments, cannot completely avoid risks. According to the report released by HennesseeGroup, during the period from 1993 to 2000, the fluctuation range of hedge funds was only about 2/3 of the S&P 500 index.