The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Hedge funds: You can run but you can't hide

A snowboarder in Utah says we're heading for a global liquidity squeeze: capital will self-destruct and the world financial system will need to reinvent itself, as it did after 1929, 1945 and 1971. He may be wrong. If he's right, what does it mean for the dealers and investors who grew rich and famous on global euphoria? David Shirreff reports.

When the world started to melt

What will go wrong next?

Asian banks: Now comes the real crisis

Asian research: Worth the paper it's printed on?

Peregrine's still flying

Country Risk December 1997: It could be worse

Global Economic Projections: Overall Rankings

According to their fans, hedge funds fared best in the October/November turmoil in emerging markets. Hedge funds, traditionally risk-averse, can steady their returns in volatile times. They tend to run offsetting long and short positions designed to profit from pricing anomalies and low-risk arbitrage.

Funds such as unit trusts and mutual funds, which can run only long positions, naturally fared worse as the markets dived. Some other open-ended, long-only funds suffered huge redemptions as investors fled the most volatile markets, especially south-east Asia. "There's a limit to what you can do," says a beleaguered long-only fund manager. "You can raise cash to maximum limits and head for markets that have fallen already." Another reasonably successful long-only manager relies on "good stock-picking and picking non-correlated countries". But with global contagion, and an exodus of US investors from emerging-market mutual funds, earning a positive return is increasingly difficult.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree