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Managing Hedge Fund Risk and Financing: Adapting to a New Era


What makes this book special is that it presents an insider’s perspective of what went right, what went wrong, and what are the lessons learned from the crisis. David Belmont had a front row seat and role to play with hedge funds as a crisis scenario few had contemplated played out—a scenario with not only huge investment risks, but also counterparty, funding, and operational risks. Want to know what really happened to hedge funds during the financial crisis? The holistic view is presented here: how to manage a hedge fund with investment, funding, counterparty and operational risks in mind.

Bob Litterman
Partner, Kepos Capital (a New York-based hedge fund)
Former Partner and Head of Firm-wide Risk Goldman Sachs

David Belmont has written a rather well-researched, thoughtful book on managing hedge fund risk that serves well as a reminder for what hedge fund CIOs, CFOs, and COOs need to think about before they use leverage in their business. The book is written in a style accessible to the lay reader as well as the industry-savvy risk manager. The experience of the managers of the Icarus fund possibly represents what a lot of large well-pedigreed fund managers went through as the Financial Crisis of 2007/2008 developed. I expect it to be received extremely well by people on the buy and sell sides alike.

Satish Ramakrishna
Head, Prime Services Risk and Complex Financing, Global Markets Equity
Deutsche Bank

David Belmont’s Managing Hedge Fund Risk and Financing is a must-read for anyone investing in, or working for, a hedge fund. David does a superior job of providing both a comprehensive and understandable framework for thinking about hedge fund risk, as well as great detail for understanding, analyzing and managing various risks associated with different types of hedge funds. In particular, the book highlights often overlooked risks including funding and counterparty risk. I learned a lot as a result of reading the book and gave copies to the hedge fund and risk management teams at UTIMCO.

Bruce Zimmerman
The University of Texas Investment Management Company (UTIMCO)

Written by a seasoned risk professional, David Belmont’s new book contains a wealth of insights on how hedge fund risk ought to be managed. The clear and direct writing style makes even complex and arcane issues easy to understand. This book should be of interest to hedge fund managers and investors alike.

Sung Cheng Chih
Chief Risk Officer, Government of Singapore Investment Corp. (GIC)

Hedge fund managers, administrators, prime brokers and those with risk oversight will find this book informative. It is a practical and implementable guide for risk management and oversight of hedge fund risks and financing with a detailed discussion on liquidity and funding risk management.

Timothy M. Curran, CFA
Managing Director
Citigroup Risk Management

David Belmont has over 19 years of buy side and sell side risk management experience gained as a Chief Risk Officer, hedge fund risk manager, hedge fund investor, and a hedge fund lender. David is currently the Chief Risk Officer for Commonfund, a manager of US$27 billion of long term client assets across hedge funds, private equity, real estate, commodities, fixed income and equities. Previously, David was the Head of Risk Management for Temasek Holdings, the Singapore sovereign wealth fund, where in addition to risk-managing the direct investing, Private Equity, and long-only investments, David risk-managed Temasek’s internal hedge fund strategies and its third party hedge fund investing. Earlier in his career, David was the risk manager for Cargill’s Financial Markets Group, the precursor to the multi-strategy hedge fund, Black River Asset Management. Subsequently, David was the Director of Risk for Nexgen Capital, a closely held hedge fund active in emerging markets, credit arbitrage, volatility arbitrage, and natural catastrophe bonds.

David’s sell side experience comes from his recent role as Global Head of Hedge Fund Risk Credit at UBS Investment Bank and as Head of Risk Management for UBS Prime Brokerage in the Americas.

David holds Master of Business Administration and Master of Science degrees from Yale University and is a Chartered Financial Analyst.


Introduction: Managing Complexity and Uncertainty

CHAPTER 1: The Quick and the Dead: Lessons Learned

CHAPTER 2: An Integrated Approach to Hedge Fund Risk Management

CHAPTER 3: A Survey of Hedge Fund Strategies and Risks

CHAPTER 4: Analysis of the Risk/Return Profile of Hedge Fund Strategies

CHAPTER 5: Managing Funding Risk

CHAPTER 6: Managing Counterparty Risk

CHAPTER 7: Risk Management for Hedge Fund Investors

CHAPTER 8: Conclusion

Appendix 1

Appendix 2

Appendix 3