Hedges clipped

Recent high-profile hedge fund collapses have put pressure on dealers offering single hedge fund-linked derivatives. It has caused some newcomers to pull out of the business and those that remain to put even more focus on risk management. By Alexander Campbell

Market volatility has become a fact of life for hedge fund managers. The fallout from the subprime crisis continues to keep the credit markets in the doldrums, equity indexes have whipped around violently, while foreign exchange rates have experienced their most volatile few months for the past decade. For some, the highly volatile, correlated market conditions have provided plenty of trading opportunities; for others, they have meant disaster.

Virtually all hedge fund strategies have found the