Friday, October 2, 1998 Published at 07:28 GMT 08:28 UK

Staggering losses at Everest hedge fund

Yet another highly speculative hedge fund has fallen victim to chaos on the world's financial markets and acknowledged staggering losses.

Everest Capital, a hedge fund based in Hamilton, Bermuda, has written its investors to tell them that the fund has lost $1.3bn of the $2.7bn it was managing at the start of the year.

One of the funds, Everest Capital Frontier Fund, specialising in emerging markets like Russia and Latin America, lost more than half of its value during August alone, and 68% on the year.

Everest's other major fund lost 42% through August.

This makes the company one of the hedge funds hit hardest by the turmoil in the global markets. However, Everest's situation is not as dire as that of Long-Term Management Capital, a much larger US-based hedge fund which collapsed last month.

Marko Dimitrijevic, founder and manager of Everest Capital, told his investors that "the magnitude of the losses on the Russian debt and the speed at which they occurred were something that I have never encountered since I began working in professional money management 17 years ago."

Hedge funds take money only from very rich individuals and financial institutions. They try to achieve unusually high returns by engaging in high-risk investments.

Several US universities are reported to have invested money in Everest Capital, as has the financier Nelson Peltz.

Hedge funds are largely unregulated, and normally there is no safety net for investors.

However, when Long-Term Management Capital collapsed the US Federal Reserve organised a rescue package financed with private money, because it feared that the fund's failure could damage economies and banks around the world.