Financial Times- Talk about a high-risk hedge fund and most people assume it is a tautology. This year’s sudden collapses of the $2bn flagship fund of London’s Peloton Partners and the $1bn New York-based Focus Capital, as well as a raft of smaller funds, has done nothing to change that view.<\/p>\n
But a small group of hedge fund investors actively seeks out the riskiest hedge funds – and believes such funds allow them to chase high returns while avoiding the peril behind the blow-ups of the past 12 months: leverage.<\/p>\n
Rather than find “safe” investments and add gearing to boost returns, they look for managers who aim high by investing only in their best ideas, by taking a view on market direction or by seeking trading opportunities.<\/p>\n
“This is hedge funds returning to their roots, to the characteristics of the last decade,” says Tom Gimbel, managing director of Optima Fund Management, the $6bn New York fund of hedge funds.<\/p>\n