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From Kirsten Bischoff, Opalesque New York:

The hedge fund industry saw net inflows during May of 2009 while its largest source of allocations - the fund of hedge funds industry was still seeing net outflows. With hedge fund performance gaining ground against the losses of 2008, investors are showing signs of returning to the space and fund of hedge funds may soon see stabilization within their sector as well.

California-based Coast Asset Management, which handles $3bln worth of institutional and private money launched in 1991. The firm offers investors core, multi-manager fund of hedge funds and other investment strategies. With almost two decades of experience with hedge fund investors, Coast Asset President David Smith told Opalesque that he expects the industry has reached a stabilizing point.

"We believe that conditions have stabilized to some degree across most asset categories after a difficult period for most investment strategies," Smith said. "It seems logical that hedge fund of funds, as indirect participants in those asset classes via their investments in underlying hedge funds would witness similar stability to their business if the stability continues." Additionally, the investors who will re-allocate to the hedge fund space have also widened their previous focus on manager performance to also include operational due diligence and risk management.

The firm announced on Monday that Roy Cal......................

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