Thousands, if not millions, of words have been written about the future of the financial services industry in general and the alternative investment and hedge fund industries, in particular. The Tabloid pundits are asking:

Is the long-short equity fund extinct? (No).
Will the credit funds return? (Yes).
How can hedge funds operate without liquidity and leverage? (They wont have to).
Has the Funds of Funds model been shown to be based on a fallacy? (No).
Will real estate prices ever recover? (Yes).

And so on.

For my part, I think these panic driven questions are just the other end of the pendulum’s swing. It is only eighteen months or so ago that the same tabloid pundits asking these questions were predicting $250 oil, $2,000 gold and a doubling of the Brick stock markets.

But one valid question I have often been asked is what will replace those hedge funds that have, for the present, gone out of fashion as a result of the 2008 credit crunch debacle?

It seems obvious to me that funds concentrating on the three or four basics of life that will always be in demand, regardless of the state of the economy, will always make money. These are health, food and energy. Add to that, a fourth priority that has grown in importance over the past twenty years or so - the environment, expressed as "green" or "Eco" issues. However, I think that, in times of economic stress, these issues tend to slip down the list of priorities for most people.


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