Fund farewells to leverage

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The global squeeze on bank balance sheets is having a knock-on effect in the structured products industry among fund derivatives providers who repackage funds of funds and add leverage for the benefit of their institutional and high-net-worth clients.

The provision of leverage, which could typically equal two to four times the equity investment in a fund of funds, is a crucial part of the business. But it is also something that credit committees at some institutions have been demanding is scaled

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