Seismic changes hit fund derivatives
Participants in the European structured products industry face an unprecedented challenge in managing counterparty risk. One of the beneficiaries of the crisis of confidence will be the structured funds industry. At the same time liquidity shortages and worries about the future of some hedge funds have taken their toll. Hedge Funds Review examines the current trends and challenges in the industry.
The global squeeze on bank balance sheets is having a knock-on effect 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
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