> The vast dollar value of the market is about sharing risk and providing liquidity.

This, very well summarized.

I would nuance (but not disagree with) your comments on pension funds though. The thing is PF do not invest themselves, they usually are, or delegate to, funds of funds, which in turn decide on allocation based on the desired risk profile. It could very well happen that the total allocation is the sum of a multitude of individually short term investments, as long as these are diversified enough. I would concede that in practice that is not really feasible though.

These risks profiles are numerous, diverse, and ultimately idiosyncratic. People often forget or don't know about all these risk constraints, because they work in a fund that is bound to a specific risk mandate.

For instance, depending on how your investment vehicule is structured (the regulatory enveloppe through which you sell your fund, which ultimately determines to who you can sell, how you can advertise, how profits are taxed, etc), you can have liquidity constraints (e.g. clients should be able to redempt daily, weekly, ...) risk parity constraints (e.g. per asset class vol budgets, to be respected daily, weekly, etc), exposure budgets (e.g. country, sector, beta, ...), counterparty risk (e.g. minimum number of managers to allocate to, or clearing houses, or custodians), idiosyncratic risks (e.g. an insurance company will need to be neutral against natural disasters, healthcare exposure, etc), ESG, etc