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From Kirsten Bischoff, Opalesque New York:

After the tumultuous markets of 2008 and 2009, U.S. hedge fund performance reflects how well managers are controlling market risk. However, the one risk that is still is the risk of government action (or inaction for that matter).

For hedge funds, government risk is two pronged: How it affects the industry through the authorship of regulatory reform and how it affects the markets through the continuation (or deviation) of current economic policies.

HF regulation is a certainty... The regulatory risk for hedge funds is perhaps not as great as it once seemed, and not as imposing as the regulation proposed for larger financial institutions. In fact, as regulation aimed at banks and larger financial institutions drive the additional spin-outs of hedge fund teams, the industry is likely to continue to re-grow in assets, strength, and influence.

However, hedge funds will have to face regulatory change as well, but after two years of waiting, many fund managers have grown to accept the anticipated new requirements that are largely focused on increasing transparency. In fact, many have already implemented them as a way to position themselves favorably with reallocating investors who also have transparency demands.

"Since the first hedge fund manager registration rule came out, most hedge funds have beefed up their legal expertise and are now in a much be......................

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