According to US hedge fund managers, there are a multitude of strategies to play Europe's troubles, and many different participants.
Hedge fund managers point out that given the up-and-down nature of the eurozone crisis, most hedge funds have been in and out of trades or forced to adjust positions depending on the changing political winds.
Earlier this year, for instance, it looked like concern about Greece exiting the euro had passed. But with the recent results of the Greek election at odds with the austerity measures demanded by its currency partners, the risk of a Greek departure from the eurozone has risen dramatically.
Daniel Loeb's Third Point fund put on a long position in Portuguese sovereign bonds in the first quarter because the New York-based manager believed the nation is in better shape than others in the eurozone.
"Portugal's debt profile is more consistent with Italy's than Greece's, its banks are substantially healthier than Spain's, and its government has enacted more aggressive labour reforms and is more stable than regimes in both countries", Loeb wrote in a May 16 investors' letter seen by Reuters.
If nothing else, the European crisis is forcing managers to keep coming up with new strategies to trade. One might say it's almost become an incubator for hedge fund managers to stretch their investment acumen.
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