Investors, regulators support hedge funds....

nvestors: we still believe in hedge funds
Bob Discolo, of AIG Global Investments, said two third of AIG's selection is manager-driven, one third strategies. A lot of hedge funds will go out of business, but there are a lot of brilliant managers and that is the most important part about hedge funds.

Michel Malo, of Qu?bec's Caisse de D?p?t et Placement said he also concentrates a lot more on managers. The pension fund is more discerning now and it will even look at managers who had had draw-downs, so long as those draw-downs are within what is expected. It has more than 30% of assets in alternatives. Hedge funds are not responsible for what is happening, he said.

Pranay Gupta, of Pearl Group, said that the best part of a portfolio is still alternatives. Hedge funds who have had big draw-downs will have trouble marketing themselves going forwards, and emphasis on strategy selection may increase.

Graham Thouret, of Diversified Global A.M., said he still thought that hedge funds were one of the best diversification in asset classes. "We are focused on accessing or even originate new strategies that are uncorrelated, like re-insurance." Risk adjusted returns have gone down, as hedge funds have grown more mature.

Gloom, Boom and Doom: the Fed has no intention of pursuing a tight-money policy
The charismatic, Swiss-German author of 'Tomorrow's Gold' and other books, and founder of The Gloom, Boom and Doom report, Dr Marc Faber, talked at length about the crisis and put forward the following conclusions:

- It is quite likely that the current synchronised global economic boom and universal, all the encompassing asset bubble, will lead to a colossal bust.
- Central bankers have become hostage to inflated asset markets. Tight money will be difficult to implement.
- Expansionary Monetary (which caused the credit crisis in the first place) are the wrong medicine to solve the current problems.
- However, the market participants may from time to time bring about tight monetary conditions by curtailing the availability of credit.
- As L.von Mises observed: "the dearth of credit which marks the crisis is caused not by a contraction but by the abstention of further credit expansion."
- Rolling inflation, stagflation, deflation may succeed each other in rapid sequences. In real terms, equities would not seem to be attractive.
- Secular uptrend in commodity prices is still intact. Sharp corrections should be expected.
- Along with rising commodity prices, inflation and interest rates are likely to increase over the next few years.
- Resource nationalism and resource-driven geopolitics will increase international tensions further.

Finding alpha in emerging markets: not the best time
Adrian Mowat, of JP Morgan Securities (Asia Pacific) said that those emerging economies which had build reserves and gone through economic reforms during the good years would be the most resilient, like China, which is predicted to have a 30% deficit, as well as Mexico and Taiwan, which governments have articulated counter-cyclical policies. Brazil is attractive, but in the long run. He is bearish on Russia, India and Korea. He expects the Baltic States and Central Europe might suffer from a domino effect, Russia to transfer more of its economic power to the Kremlin, and to do some "colonisation" through forex. The current period does not offer many alpha opportunities, as equity prices (and everything else) are driven down but the next stage will offer more opportunities. "We shall see more back-to-basics and back-home in the world," he said.

Larry Brainard, chief economist at Trusted Sources Research, believes that China's growth will hold but profit will not. Brazil's Central Bank is quite effective and it......................

Source:
Investors, regulators support hedge funds....