By Neil Wilson
Since the start of 2008, events in financial markets seem to
become more alarming almost by the day. First, we had the
unbelievably rapid implosion of the $2 billion Peloton ABS
fund, the biggest hedge fund failure we have yet seen outside
the United States. Then we had the even more stunning
near-collapse of Bear Stearns - rescued at the 11th hour by
JPMorgan. And then we had a dramatic rash of losses among funds
that ply relative value strategies in Japanese government
bonds, such as the Endeavour Fund - which, after eight years
among the most low-volatility players in the business, suddenly
lost 27% in a matter of days.
When the U.S. subprime mortgage market first ran into major
problems last year and the credit crisis began, it seemed clear
there must be repercussions for other markets - and thus for
hedge funds, too. It was not obvious, however,...