You can't be too careful

LTCM was an important lesson in leverage for fund managers and hopefully the massive gearing seen in 1998 will never be repeated

Self-imposed restrictions on leverage in the four years since the collapse of Long Term Capital Management (LTCM) has led to a substantial drop in the amount hedge funds borrow.

Fund managers, prime brokers and funds of hedge funds, tend to agree leverage is simply another form of risk ' a necessary evil that has to be monitored and analysed, along with various other data on a fund. However, the massive gearing witnessed by LTCM's investors in 1998 may never be reached again, with funds of hedge

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