Financial Times FT.com

Hedge fund investors seek shelter from meltdown

By Eric Uhlfelder

Published: August 31 2008 19:42 | Last updated: August 31 2008 19:42

Can hedge fund investors sidestep meltdowns?

Take the collapse of Bear Stearns’ high-grade structured credit and structured credit enhanced leverage funds, which reportedly invested primarily in triple A-rated tranches of mortgage-backed securities. Their managers hedged their risk through credit default swaps to produce a positive carry trade, promising steady monthly returns of 100-200 basis points with limited downside.

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