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From Kirsten Bischoff, Opalesque New York:

The slight decrease in assets that hedge funds saw in January was driven by performance losses as most strategies were slightly down or flat for the month. However, investors continue to show growing confidence in managers, allocating $4.51bn during the first month of the year (according to HedgeFund.net). While this may be the first sign of growing strength in asset raising, hedge funds are still $800bn below the industry's high water mark set in 2008, and fluctuating markets in the beginning of 2010 may very well extend the sideline time for cash that missed the bull rally in 2009.

In the meantime, many managers are still trying to formulate a plan for asset growth. While much of the focus (on the part of both the media and managers) has been on the possibilities for allocations from institutional investors, most hedge funds are too small to qualify for such investments.

"Even smaller institutional investors typically allocate $2m to $8m, and if you are a small fund that is still going to be a pretty big chunk of your asset base. Institutional investors typically will not allow themselves to be more than 8%-10% of a managers investor base, which disqualifies a large number of funds," says Justin Perun, of Chicago-based business development firm Bull and Bear Capital.

Perun, who will be a panelist for the ......................

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