Ace is one of the backers of a new hedge fund to be launched by...
Bermuda insurer Ace is one of the backers of a new hedge fund launched by the founder of Long-Term Capital Management, the hedge fund whose implosion brought financial markets to the brink of collapse in 1998.
According to reports, Nobel prize-winning Robert Merton said a new fund focused on emerging markets had been set up late last year.
The fund was created under the umbrella of Integrated Finance, the boutique investment bank set up in 2003 by Merton and Roberto Mendoza, the former vice chairman of JPMorgan and ex chairman of Egg, the internet bank.
The new fund, to be open to wealthy individuals and institutional investors, will reportedly be making the same sort of bond market investments that were the staple of LTCM's style.
Merton was one of a team of LTCM's founding partners, which included John Meriweather, a Salomon Brothers bond trader, a former deputy governor of the US Federal Reserve and a handful of Nobel prize-winners.
The company had developed trading strategies that used complex mathematical models but the scheme unraveled in 1998 losing $4.6bn in less than four months.
Reports said Merton shrugged off LTCM's reputation as the "Titanic of the industry" at a recent hedge fund conference, saying: "[The collapse] is not unique to hedge funds. People will make mistakes."
Reports said backers of the new fund include Ace and BNP Paribas.
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