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SAFETY MEASURES

The collapse of Lehman Brothers in September 2007 triggered the start of the global financial crisis, its scale taking almost everyone by surprise. What lessons have fund selectors learnt from its devastating impact, nine years on?

In crisis situations, you often find out that seemingly unimportant issues suddenly become very important. The global financial crisis was no different. Many fund selectors discovered that having thoroughly investigated a fund’s track record, management team and investment process offered no guarantee that their funds would make it through the turmoil that ensued from ‘Lehman’ unscathed. The chart opposite plots a grim reminder of what happened just before and after the crisis.

“What we learnt during the crisis is that due diligence is not just about the manager, performance and the investment process. It’s a lot broader than that,” says Frank Reisbøl, the managing director of Banque Carnegie Luxembourg.

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