International Herald Tribune – As world markets shudder, the hedge funds based in London, once the toast of the city’s flashy financial elite and magnets for cosmopolitan capital, have stumbled badly.
The increasingly global sweep of the credit crunch and the collapse of Lehman Brothers have punished all manner of hedge funds – secretive investment pools that rely on generous lenders and a high tolerance for risk to thrive.
But in London, where a number have already shuttered, the hedge fund retreat has a pointed resonance. Along with celebrity chefs, Russian oligarchs and Italian soccer coaches, hedge funds that established operations here in the past decade have been seen as a mark of London’s hip new spirit of decadent cool – a notion reinforced by the pound’s long period of strength and the boom in home prices.
Now, the failure of Lehman Brothers, which had deep financial relationships with some of the largest hedge funds in the world, has unsettled an already jittery market – sparking fears that some hedge fund assets might be frozen there and thus be unavailable for sale if investors choose to redeem them.