The monetary and fiscal policy responses to the Covid-19 crisis across developed markets helped hedge funds recover crisis losses, recording year-to-date, on average, positive returns. However, the market volatility caused by the Covid-19 pandemic has presented huge operational and risk management-related challenges.
What hasn’t helped fund managers is the use of traditional quantitative risk models, which failed to understand the new landscape and the rules defining it. In order to succeed in the new normal, hedge fund managers will need to change their risk management approach, at portfolio level, or face continued inefficiencies.
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