Uncertain market conditions present new challenges and opportunities for hedge funds

The conference, organised by Terrapinn, has become a leading event in the region and about 600 delegates are meeting in Dubai today. This year's event sees some of the world's leading figures in hedge funds debating the current events in global markets and their impact on hedge fund investors, and examining new areas with profit potential. The industry has grown rapidly, with global hedge fund assets now estimated to exceed $1.8 trillion (according to HFRI), having almost doubled from $1 trillion in 2005.

Among the conference highlights is the keynote address by Peter Clarke, CEO of Man Group plc, the parent company of Man Investments, which is one of the world's largest providers of hedge funds and sponsor of the conference. Notable speakers also include Nasser Al Shaali, CEO of Dubai International Financial Centre Authority, and legendary strategist, author and asset allocator Barton Biggs.

In his presentation, Peter Clarke will examine how, against a backdrop of increasing diversity and texture in the industry, the growth story for hedge funds remain persuasive. With capital flows concentrating among the established premium brands, Peter will look at how scale, capital strength and what he calls "cumulative alpha" are being leveraged by this group to foster innovation and build out their franchises. Peter Clarke commented as follows: "We are moving into a period where hedge funds are recognised as a core component for investor portfolios with institutional quality providers setting the pace".

Nasser Al Shaali, Chief Executive Officer of the Dubai International Financial Centre Authority said:

"The changing regulatory and investment environment in the region, along with very strong economic fundamentals and increasingly sophisticated MENA investors make this a time - and a region - of tremendous opportunity for both local and international firms operating in the field of alternative investments. As an alternative asset class that can lower risk across a portfolio of investments, hedge funds are an increasingly attractive option for investors here in the Middle East - just as they are for investors across the world."

Antoine Massad, Chief Executive of Man Investments Middle East Ltd said, "The turmoil in global financial markets in the past six months has set an intriguing backdrop for examination of hedge funds in the Middle East region. After more than two decades of using hedge funds, private client investors from the GCC states have become familiar with their value as a source of additional return and downside protection in their portfolios. But the financial climate has not often presented as many opportunities and challenges as we see today."

Massad noted that new initiatives by financial regulators and the dynamism of local markets have made the GCC an attractive market for hedge fund providers. Although all of these currently invest outside the region, this is likely to change soon as a result of strong demand for hedge funds that invest in local markets.

Hedge funds offer GCC investors an alternative to local traditional market investments, giving them the ability to obtain good returns in spite of market corrections. They can also be used to offset specific market risks, for example by trading strategies with a low or negative correlation to fuel prices.