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Hedge funds are known for their potential to deliver high returns, but they also come with significant risks, including the potential for risk-sharing asymmetry. This means that the gains and losses are not equally distributed, which can lead to unequal risk exposure for investors. Considering this, what steps can a pension fund manager take to mitigate the risk associated with this potential risk-sharing asymmetry in hedge fund investments?
A
Allocate the money across several different hedge fund strategies to diversify away the asymmetry in risk sharing.
B
Choose a reputable hedge fund manager that manages investments for other major pension funds.
C
Ensure that the hedge fund managers have a sizable amount of their own wealth invested in their fund.
D
Require the hedge fund to provide a daily position report to better monitor the potential asymmetry in risk sharing.