With global share markets struggling to recover from the worst downturn in years amid fears that a US invasion of Iraq may be only weeks away, the clamor for so-called safe-haven assets has been growing louder by the day.
But while the surge in demand for bonds, and more recently gold and an array of other commodities, has received widespread coverage in the pages of the world's financial press, a less well-documented development has gone largely unnoticed.
At least outside the ranks of the cognoscenti, that is.
At a time when poor returns have been driving growing numbers of mutual fund investors to redeem their stock market policies, demand for alternative investments -- better known as hedge funds -- appears to know few bounds.
Hedge funds are investment vehicles which aim to achieve above-average returns by betting heavily on movements in currencies, stocks, commodities and other financial markets, frequently using borrowed money.
"Hedge funds are becoming part of the mainstream. They're becoming much more available for pension funds and the like," one London-based hedge fund manager told AFP, asking not to be named.
Many traditional fund managers now allot a percentage of their assets into hedge funds.
And some, such as Swiss bank UBS, have gone further by buying their own hedge fund business.
Truly independent figures on an industry which remains cloaked in secrecy are hard to come by.
But according to Nashville, Tennessee-based Van Hedge Funds, a research firm that claims to maintain one of the most extensive databases on the industry, by the end of 2002 there were over 7,500 hedge fund managers operating globally.
And between them they had US$650 billion (605 billion euros) of assets under management, up from US$600 billion a year earlier and just over US$100 billion a decade ago.
Not bad for an industry which in many countries is barred by regulators from marketing its services and has struggled to repair an image tarnished by a series of high-profile scandals, most notably the Long Term Capital Management debacle in September 1999.
While its growth can be traced to a number of factors, the slide in stock markets has undoubtedly provided the industry with a major boon.
"It's simple. In this environment people are desperately chasing better results," said Robert Schulman, the chief executive of New York-based investment advisors Tremont.
According to a composite index of 1,600 hedge fund managers collated by Morgan Stanley Capital International (MSCI), the industry made a 3.7-percent return on assets under management last year.
Nothing to write home about perhaps, but a figure which compares favourably with the whopping 21-percent decline suffered by MSCI industry benchmark of global equities' performance.
Moreover, despite a reputation for reckless gambling, supporters claim hedge funds actually offer far safer havens than typical assets such as stocks.
"One of the main attractions of the strategies we use is that returns have little or no correlation to the markets," the anonymous hedge fund manager said.
"If you're buying one stock and selling another against it, hoping to benefit from some kind of anomaly in the prices, you're usually not really bothered if the market goes up or down," the manager added.
Strictly speaking the term hedge fund is a misnomer, since not all types of funds actually employ hedging techniques -- the practice of taking a position in two securities whose prices are correlated, in the hope that losses on one will be more than offset by profits on the other. But the majority do, in contrast to most traditional money managers.
As a result, while their returns will generally be lower in rising asset markets, hedge funds can come into their own in falling ones.
And with the hedge fund industry having lured away many of the financial world's top brains with huge performance-related salaries, Schulman is convinced hedge funds are here to stay.
"It's a growth industry. It might trail off a little if equity markets pick up but if they stay where they are it will probably continue," he said.
But a word of warning for any would-be investors.
The majority of funds are unlikely to be interested unless you happen to have a million dollars to spare.
"In practice some of the less-established funds have been struggling to get money in, but even they probably don't want to know unless you've got at least US$100,000," the hedge fund manager said.
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