Hedge funds, highly leveraged investment strategies and financial markets

Article Abstract:

Hedge funds are relatively small, compared with other sectors of OECD financial markets, based on their capital bases. The former are even smaller than other types of managed funds such as mutual funds, pension funds and trust accounts. However, there are certain hedge funds that are quite big and are willing to establish large positions on one side of a market. The impact of hedge funds on financial markets can be understood by studying their trading practices. Most hedge funds exploit temporary valuation differences between similar types of securities.

Evaluation, Financial markets, Western Europe, Organization for Economic Cooperation and Development

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Hedge funds, leverage, and the lessons of Long-Term Capital Management

Article Abstract:

The Long-Term Capital Management (LTCM) Fund incurred an additional loss of $1.8 billion during Aug 1999. The loss of equity for 1999 had already reach 50% by that time and LTCM Fund's capital base went down to $2.3 billion. Reasons that led to its near-failure include its low degree of external monitoring and its high degree of leverage. The LTCM Fund was the most leveraged hedge fund reporting to the Commodity Futures Trading Commission at the time of its near-collapse. It experienced severe liquidity problems when its investments began losing value.

Finance, Long-Term Capital Management L.P.

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Venture capital in OECD countries

Article Abstract:

Member countries of the Organization for Economic Cooperation and Development should provide exit mechanisms to attract more venture capital that will support their industries and stimulate the development of new technologies. They should follow the example set by the US government which encouraged the formation of venture capital during the post-war period by implementing new financial regulations and creating agencies that supported the formation of venture capital firms.

Venture Capital Companies, Miscellaneous Intermediation, Management, Venture capital

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