LTCM Founder Jumps Back In Hedge Fund Game

Jul 21 2006 | 5:45pm ET

Robert Merton, the founder of infamous Long Term Capital Management, the hedge fund that roiled financial markets in 1998 when it collapsed, is preparing to launch an emerging markets hedge fund in September.

The Victoria Fund will be managed by Jose Lois Daza, the former head of emerging markets strategy at Deutsche Bank. The minimum investment in the new fund is $5 million, and the management fee is 2%. The fund will invest in sovereign and corporate bonds and foreign exchange, among other things.

The Nobel-prize winning Merton, who founded boutique investment Integrated Finance in 2003, revealed his latest endeavor to reporters at a recent hedge fund conference in Cannes.

According to The Times, Merton isn't haunted by past LTCM demons. He told the paper, "(Collapse) is not unique to hedge funds. It's inevitable when you have a system with a low point of entry. People will make mistakes."

In addition to Merton, the founders of Integrated Finance include Roberto Mendoza and Peter Hancock, the former vice-chairman and former chief financial officer, respectively, of JPMorgan. Backers of the boutique include French bank BNP Paribas and Bermuda insurer ACE.

The investment committee overseeing the new fund includes Hancock, Gene Shanks and Thomas Graham. Shanks was formerly a president of Bankers Trust Company and Graham led hedge fund¬-linked structured products at CDC IXIS Capital Markets.


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