A high-performing hedge fund has shut his funds and is giving money back to investors after deciding that the risk of losing money from a bank collapse is unacceptable, according to a report in the Financial Times.

Andrew Lahde, of California's Lahde Capital, wrote: "While we concede there are additional opportunities in this episode of crisis and uncertainty, we have concluded that those opportunities are far outweighed by the risks attendant in the use of the over-the-counter derivatives market."

Mr Lahde said his fund lost about 2 per cent from the Lehman collapse as trades due to settle last Monday had not gone through.