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From Kirsten Bischoff, Opalesque New York:

Hedge funds in May almost reached pre-2007 levels of allocations, as investors poured $8bn net into hedge funds. However, investors, and many managers are also simultaneously growing more bearish about the global economy (according to TrimTabs/Barclayhedge 38% of hedge fund managers are bearish on the S&P 500 and most managers think there is a good chance that the US will slip into a second recession by year end). Their continued growing confidence in hedge funds may be driven by the capital protection many funds showed during the financial crisis as markets tanked, and most hedge fund strategies managed to comparatively stem losses very well.

The outlook of concern was evident on Thursday when Atlanta-based firm West Mountain, which runs three multi-manager, multi-strat funds announced that it would be increasing its "focus on protecting client portfolios from high volatility, particularly during times of severe market stress." Opalesque has learned that this includes the launch of the firm’s third fund – called The Tail Event Fund, launched on July 1, 2011 – which is designed to take advantage of opportunities that arise as economic stress continues to roll through the debt-fueled global markets.

Although he did not want to specifica......................

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