Nobel economist Merton to open new hedge fund
Aug 24, 2007
uk.reuters.com
CAMPOS DO JORDAO, Brazil (Reuters) - Robert Merton, the Nobel Prize winner who co-founded the failed hedge fund Long-Term Capital Management, said his new firm plans to start an asset management business and open new hedge funds.
Trinsum Group, the firm created when Merton's Integrated Finance merged with Marakon Associates, will launch the new business before the end of the year, he said in an interview on Thursday.
The firm, which already has an emerging markets fund, also plans to offer "specialty funds," he said without giving more details.
"Asset management clearly is in our plan," Merton said on the sidelines of a financial derivatives conference in Brazil. "We will also have other funds."
Victoria, as the emerging markets fund is called, invests in fixed income, currencies and derivatives, and has "behaved better than expected," said Merton, a Harvard professor who won the 1997 Nobel Prize in economics with Myron Scholes for creating the Black-Scholes formula of pricing options.
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LOTS OF MONEY LOST
Hedge funds have posted huge losses recently because of the slump in U.S. subprime mortgage markets, which caused the worst credit and liquidity squeeze in a decade, and while liquidity has partially returned, the damage for funds is likely to continue, he said.
"There's going to be lots of money lost, there has been and there will be more," Merton said. "There will be some markets, some instruments, some funds, some firms that will fail or disappear. That's inevitable."
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