Fund managers gathered in Monaco for the GAIM conference have said that depressed asset prices and rock-bottom debt instruments could be worth the risk.
Robert Marquardt, founder of Signet, a fund of hedge funds, told reporters that the Greek crisis was "certainly a great chance to make money".
He added: "With some Greek debt trading at 40 cents on the dollar, you can assume that recovery value over one or two years will be greater than that. You can hedge that by being short Spain or Portugal – somewhere that's not really in play."
Hedge fund managers thrive in volatile market conditions where they can take advantage of being fast-moving and nimble.
Jon Moulton, the veteran venture capitalist, said the crisis and its impact particularly on European banks could present opportunities for private equity too.
Also speaking from the conference, he said: "If Greece defaults, whether now or in one year or so, there will be a real chaotic period and all kinds of opportunities will surface you hadn't really thought about.
"Plausibly, that will result in a lot of financial institutions finding themselves short of capital, and you'll find quite a few things being sold rapidly, and private equity would have the funds to play when other people don't."
He added: "Some of the hedge funds could also play in the same area, as banks have to shrink their balance sheets in a rush to replace the capital they used to call Greek debt."
European banks hold billions of euros of Greek bonds that have plunged in value in recent months.
German banks have the highest exposure to Greek sovereign debt, worth of €22.7bn, according to figures released in early June by the Bank of International Settlements. The German finance ministry has held meetings with the major banks to discuss voluntary roll-overs of their debts.
By Louise Armitstead
Source > Telegraph
