LTCM changes risk balance

Sun Jun 1, 2003



Science and software combine to take the danger out of hedge funds, but are they making managers too conservative

In the hedge fund industry, 'risk' is not always a four-letter word. As Capital Market Risk Advisors, a New York-based financial advisory firm, noted in a white paper, "Risk itself is not bad. What is bad is mispriced, mismanaged or unintended risk."

That said, several factors have come together over the past five years to push the related issues of risk identification, measurement and management to the fore. These include increased volatility in the world's capital markets, the growing complexity of hedge fund strategies and the rapid growth of the industry itself.

Spectacular hedge fund debacles like the near collapse of Long-Term Credit Management in 1998 coupled with periodic reports of other hedge fund blow-ups and fraud, such as the Manhattan Fund in 2000 and most recently the Eifuku fund in Japan,...

ISSN: 2151-1845 / CDC10004H

Register

By registering you will receive

  • A monthly newsletter on your specified areas of interest
  • A fortnightly update on the sector

Free Trial

Take a trial today and access

  • Performance news, fund launches, regulation changes and people moves
  • Profiles of fund managers, investors and distributors
  • Live league tables
  • Investor mandates


Popular Searches on HFI