Key Points
• Hedge funds are not all the same, but deleveraging and redemptions are very common issues at the moment.
• Remember the three Ds – Diversification, Due diligence and Darwinism.
• The overhang of potential redemptions towards the end of 2008 could stress popular hedge fund strategies.
• For crowded strategies, subscriptions or the end of deleveraging could be very positive, but more redemptions, further deleveraging or shutdowns could cause further losses.
• Change brings opportunity. Seek out the less crowded trades and more innovative strategies.