“Just as diseases spread through contagion, so does confidence, or lack of confidence. Indeed confidence, or lack of thereof, may be as contagious as any disease”
- George A. Akerlof and Robjet J. Shiller, Animal Spirits

Summary
• Hedge funds have had positive net inflows over three consecutive months since the end of May. At the same time, there are still a high number of funds that are closing and only very few new launches.
• We have not seen any significant changes in the liquidity terms and the fees taken by hedge funds during H1 2009. We think that new liquidity terms and lower fees will only apply to newly created funds.
• Following the Madoff scandal, hedge fund managers have put operational risk at the forefront of their concerns internally.
• During 2009, hedge funds have delivered performance in line with investors’ expectations. As of 31st July, the HFR Global Hedge Fund Index is up 7.2%.