Managers change tack on risk

Discretionary stop/loss procedures are increasingly being favoured over automated risk controls by hedge fund managers as markets are becoming more volatile. Prices opening significantly lower than their previous day closures during October and November 2002 are highlighted as the main cause for hedge managers to look for added flexibility. Single strategy and funds of hedge funds, particularly in long/short equities, are now being urged to view risk on a portfolio basis and place their trust in measurements such as Value at Risk (Var) during volatile periods. Var is a technique which...