Fixed-income trading by U.S. hedge funds down 40%, study says

Connecticut Post – Fixed-income trading by hedge funds slid 40 percent in 2009 as the credit-market crisis forced adjustments in their trading practices, according to a study by consulting firm Greenwich Associates.

Hedge funds are more likely than other types of firms to say they’ve cut back on the total number of securities firm used for fixed-income trading, shifted trades to dealers with the least counterparty risk and reduced the concentration of trading business held by any single dealer, according to Greenwich Associates 2009 North American Fixed Income Investors Survey.

“Perhaps the fact that hedge funds have taken these steps explains why only 12 percent of hedge fund managers say counterparty risk remains a significant concern, compared to 18 percent of institutions overall,” Greenwich Associates consultant Tim Sangston said.

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