In the first of a series of breakfasts with top hedge fund managers, Savvas Savouri, partner at Toscafund; Chris Goekjian, chief investment officer at Cheyne Capital; and Luke Ellis, head of the multi-manager unit at Man Group, talk about how their funds are playing the Euro zone crisis and how the short- and long-term views are affecting investment.

“If you look at a macro fund, you know, they’re absolutely trading,” says Ellis. “They have a strong view on the negative future of the Euro structure…. [S]o the percentage likelihood of a Euro zone break-up is tiny, but the cost of putting a trade on to take advantage of that is also tiny…. [T]hat particular team is bearish about the future for Europe, for the economy, that basically politicians are going to mess it up until, you know, and so they trade with that bias on a day-to-day basis.”

“There are 17 Euro zone nations, and there are another seven or eight that pretend to be in the Euro zone, and we’re talking about everyone from Bulgaria through to Latvia, and even including non-E.U. economies like Croatia and Serbia,” Savouri says. “That’s where you’re going to start seeing currency weakness, that’s where you’re going to start seeing debt concerns.”

“Looking on to knock-on effects, or secondary effects [of a Greek default] is really how you have to position yourself because to us, again, just speculating on the, you know, event of the default itself is difficult,” Goekjian says.

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