Content area
Abstract
Many hedge funds reacted by gating funds and hastily modifying liquidity and redemption rules, preventing investors from withdrawing their cash. Very few funds can claim to have met all investor redemptions, while at the same time generating double-digit returns. BlueCrest Capital Management is one of them. The London-based hedge fund, with $17 billion of assets under management, navigated its way through the turmoil by investing only in liquid instruments, taking a proactive approach to counterparty risk exposures and never refusing a redemption request. A major focus fo the firm since the onset of the financial crisis has been counterparty credit risk. This has been a particular issue for the industry as a whole since the collapse of Lehman Brothers in September 2008. In contrast, BlueCrest will only transact with a counterparty if it is willing to segregate and ring-fence initial margin. The firm has a six-person risk team, which monitors exposures using a variety of tools, including value-at-risk.