Measuring risk on hedge fund investments is difficult, but vital for trustees to learn, according to a RiskMetrics founder who will present a how-to guide at an upcoming AIST seminar.
Alan Laubsch, a founding member of international market risk assessor RiskMetrics and director of the group’s Asia Pacific business, has compared the most recent struggles of hedge funds with those of high-profile collapses of hedge funds Long Term Capital Management in 1998 and Aramanth Advisors LLC in 2006. His conclusions are not good news. “He’s compared the recent meltdown with earlier high-profile collapses and has come out with the key things you need to look at,” Riskmetrics director Dean Paatsch said. “The issue is that there are certain warning signs.” Laubsch will present his findings with a practical bent on how super fund trustees can be more aware of their fund’s risk exposure, and control it accordingly. One method Laubsch will explore is where the super fund mandates the hedge fund manager to periodically report its risk. For example, institutional funds manager Hermes has mandated hedge funds it invests with to report daily. The seminar, hosted by the AIST, will be held in Melbourne and Sydney today and tomorrow respectively.
The brunt of losses from the LA wildfires are expected to be borne by primary insurers and high-risk reinsurance programs, but super funds are nevertheless closely monitoring the possible impact of the fires on catastrophe bond and insurance-linked securities exposures.
Simon HoyleJanuary 17, 2025
