Risk controls are vital

Equity market hedge funds, bottom-up driven funds taking long and short positions in stocks on a global basis, continue to show relatively strong performance over the three year period to the end of August. The average of 149 funds gained 96.04% over the period, with the worst drawdown average of -25.2%.

Bob Lyster, with fund of fund managers Lyster Watson in New York, says: "The funds that have done well this year are run by firms whose styles are specifically designed to be more hedged, [s