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From Kirsten Bischoff, Opalesque New York:

The Hennessee Hedge Fund Index gained +24.6% in 2009, as hedge funds across many strategies put distance between the disappointing returns of 2008 and a brighter future for a stronger, more streamlined industry.

"Hedge funds experienced their best year since 1999 and were able to perform in line with the traditional equity markets in 2009 despite the strong rally and moderate net exposure," said Charles Gradante, Managing Principal at Hennessee Group in a statement released along with the firm's indices results for year-end 2009.

Asset raising After $145bn left hedge funds during the first three quarters of 2009 (according to HFR) asset levels stabilized through the end of the year. However, even with the strong performance of 2009 fund raising has remained very sluggish, even for funds with outperformance through the entire financial crisis. Opalesque has heard from several managers with outstanding 2008 and 2009 performance who, hit with redemptions by cash strapped investors are just now seeing an uptick in investor interest, but still very few actual allocations.

It is likely the first signs of asset raising will come from seed vehicles, which are often run by dedicated hedge fund investors, very well versed in all aspects of the industry. If this is the case then funds may finally be arriving at the starting line for rebuilding the asse......................

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