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Alternative Market Briefing

Being liquidity providers proved painful for many last year, but firms like DragonBack Capital are seeing reallocation rewards

Wednesday, December 02, 2009

From Kirsten Bischoff, Opalesque New York:

Despite the devastating loss of assets in 2008 and early 2009, hedge fund managers are beginning to show signs of optimism regarding investors returning to the industry. Hedge funds were amongst the most popular investment vehicles for institutional investors over the past five years and according to a recent survey by Morningstar these investors expect to increase allocations in the future. The (slowly) growing allocation announcements and RFP distributions have spurred some fund managers to dip their toes back into the asset raising waters.

One such fund firm is Hong Kong-based DragonBack Capital, manager of a $200m multi strategy fund as well as an internal volatility fund that is nearing the end of its incubation period. Like many mid-sized managers, DragonBack has exited the most tumultuous period in the hedge fund industry protecting investor assets (ending 2008 +4%), meeting redemption requests, and perhaps feeling like an even stronger firm than they were prior to August 2008. While hedge fund growth is being measured by new launches - DragonBack may well represent the re-growth that established, mid sized funds are hoping is fueled by returning investors.

"We have seen some redemption cancellations and also secured some fresh subscriptions," DragonBack CEO Rob Lance told Opalesque of the current asset-raising environment.

The flagship multi-strategy f......................

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