Monkeys in the middle

12 January 2007 By John Christy

The days of easy money may be over for hedge funds. A new survey calls for only modest asset growth in 2007. Investors are now more choosy. That will make it harder for many funds to raise money. Mediocre upstarts have the most to lose.

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According to Deutsche Bank's latest survey of hedge fund investors, inflows into hedge funds in 2007 are forecast to rise 10% to $110bn. Survey participants said that they are allocating capital to fewer managers, but increasing the amount of their investments.

Investors expect emerging Asian markets to be the topperforming region in 2007 with 25% of survey participants expressing a bullish view.

In the wake of the collapse of Amaranth, survey participants appear to be more cautious about investing in multistrategy funds. Investors expect the best returns to be in Long/short equity, Macro, EventDriven and Distressed strategies this year.

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