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From Kirsten Bischoff, Opalesque New York:

As 2010 draws to a close, hedge fund investors are reportedly warming to risk. Perhaps missing the outsized performance returns they saw in 2009, hedge fund investors appear more willing to move money back into “riskier” strategies. Even though many managers have reached previous high water marks, a large chunk of investors are still trying to recoup 2008 losses; and it has become ever more apparent that during the expected, prolonged market stress, every basis point counts.

Firms such as Chicago-based Horizon Cash Management have seen the change in investor sentiment as well. The firm’s hedge fund clients have seen redemptions taper off and new subscriptions come in, and as that happens Horizon is managing larger amounts of cash for them.

However, the rising comfort level with “risk” (on the part of both managers and investors) does not translate to “riskier” behavior.

Initially, what funds were focused on during and after the financial crisis was “what is safe?” Pauline Modjeski, President of Horizon told Opalesque. “While safety is still paramount, one of the most important things that managers are looking for is to make sure that they also aren’t leaving any money on the table.”

Horizon has been seeing prospective clients that are looking to actively manage cash holdings, due largely to the combination of investor pressure to eke out ret......................

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