Hedge investors hunt for next blockbuster strategy

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LONDON, June 15 (Reuters): Top hedge fund bosses will debate whether an upturn in distressed investing or profitable macro strategies offer 2008's blockbuster trade, just as short subprime was in 2007, when they meet in Monaco this week.

GAIM International 2008, held from June 17-19 in the Mediterranean resort for the super-rich, comes as the $2.6 trillion industry faces up to poor returns and investor outflows and searches for a follow-up to betting on falling subprime assets last year.

Such a strategy helped hedge fund manager John Paulson, who will deliver his views on the credit crisis to the conference, earn $3.7 billion in 2007, according to Alpha Magazine.

Global macro funds, which retuned 17.36 per cent in 2007 and 5.19 per cent in the first four months of 2008, according to Credit Suisse/Tremont, have been a popular choice with investors recently as other strategies have struggled.

However, not everyone is convinced such strategies, which bet on the likes of global equity markets, world currencies, sovereign debt and commodities and typically benefit from increased volatility, will continue to deliver.

"The market is saying go long macro, short event-driven. That was last year's trade," Francois Barthelemy, partner and fund manager at F&C Partners.