Unravelling Hedge Fund Leverage

In The Australian Financial Review I explain how Macquarie Bank has side-stepped the interest rate rigging scandal plaguing the major banks; examine the performance of some of Australia's best performing equity hedge funds (VGI and LHC are up 18% and 20% respectively over the last 12mths); segue into how you can avoid portfolio blow-ups through introducing "positive skew" and related advice from Deutsche Bank’s chief international economist, Dr Torsten Sløk, on how central banks are threatening global financial stability with their pursuit of cheap-money-at-all-costs policies; and unravel the tricky subject of hedge funds' "net" and "gross" exposures---the difference between the two is leverage, which can make a seemingly safe "market-neutral" hedge fund that claims "zero per cent" net market exposure twice as risky as a normal long-only equities manager. Free (VIEW LINK)