Merton Fund Fails: Long Term Consequences of Long-Term Capital?

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As it turns out, Scotty Fitzgerald might have known what he was talking about when he wrote that there are no second acts in American life. Robert Merton, the Nobel prize winning economist who helped found the spectacularly failed Long-Term Capital hedge fund, is shutting down his new debt fund three months after starting it. Investors were scarce, an especially harsh blow in a period when money was flowing into hedge funds at record pace. The official spin is that there were already too many debt funds out there—but if that’s true it’s something Merton and company should have considered before launching the fund. Back to the drawing board, we guess.

Nobel economist closes hedge fund
[Bloomberg in IHT]

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