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Hedge funds no longer stand at the abyss, says a new global Ernst & Young report “Restoring the balance: 2010 global hedge fund survey”.

Ernst & Young polled 104 hedge fund managers globally (including several of Canada’s largest hedge fund managers) who manage some US$585 billion in assets. For the first time, 53 institutional investors were included which represent US$260 billion in assets, more than one-quarter of whom are invested in hedge funds.

“In 2008, at the height of the downturn, nearly half of the hedge funds interviewed reported investment returns of -10% or worse. In 2009, 45% reported positive returns of more than 20%. Less spectacular gains are expected for 2010, but the doom and gloom seems to be in the past,” says Leon Chin, Canadian Hedge Fund Leader and Partner at Ernst & Young.

The survey also reveals that investors agree with most hedge fund managers that the impact of new government regulations will reshape the future of the hedge fund industry. However, investors and managers both feel that enhanced regulations will not be overly beneficial.

Here are some notable findings from the survey:

• Of the hedge fund managers who placed restrictions on investor redemptions at the height of the downturn, 45% have lifted them. Larger managers were the first to lift them, with more than two-thirds saying they have done so.
• Nearly 45% of hedge funds have made changes to fees, liquidity or structure in order to attract new capi......................

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