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By Christine Gaylican, Opalesque Asia:

One of the hard lessons learned by hedge fund managers from the global financial crisis is the problem on liquidity.

The Olympia Capital Management's latest research published by Opalesque indicated that less than 1% of hedge funds have changed their liquidity terms in order to cope with the redemption frequency made by some investors in late 2008.

Olympia Research observed significant changes in the liquidity terms in the past 12 months by comparing the liquidity terms of hedge funds that are in the HFR database as of May 30-09 with their liquidity terms recorded a year earlier.

"After exclusion of the duplicates (e.g. different fund classes), the sample of hedge fund companies surveyed contained 2659 funds. Out of these 2659 funds:

• 22 (0.8% of the funds) changed their redemption frequency;
• 36 (1.0%) changed notice period of redemption;
• 22 changed their lock-up period changed their liquidity terms.

Others tackle liquidity concerns differently by diversifying their investments.

Managers tried different strategies

A Hong Kong-based strategist in asset allocation with Citi Group said they have increased strategic exposure to corporate credit despite the fact the asset class turned illiquid during the financial crisis.

"We tried to steer clear of illiquid asset classes. We think corporate bonds are undervalued from a long-term standpoint and expe......................

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