Too hot to handle?

Hedge funds may have benefited from equity volatility strategies this year, but they have found it increasingly tough amid the unpredecented turbulence and illiquidity of the past few months. How are the vol specialists outperforming? By Joe Marsh

Equity volatility hedge fund strategies in Asia have been busy going long gamma this year and doing very well out of it. And while the unprecedented financial turmoil since August has made it tougher for all concerned, volatility-based returns are still ahead of the pack, agree bankers and fund managers (see box). In fact, several dedicated volatility funds are in the process of launching or have done so in the past few months, which is testament to the success of such strategies in the current