“We see 20% annualised industry growth, despite the pace slowing a bit in 2002,” says Ms Parker. “The broad array of strategies available to hedge fund investors offer clear advantages compared to traditional buy and hold investments, because hedge funds do not depend on market direction for success.”

Ms Parker says the steep yield curve in the US is continuing to make fixed-income arbitrage strategies attractive, while global uncertainty should provide many opportunities for macro strategies. She predicts that the euro will continue to strengthen against the US dollar and the yen, giving currency managers solid opportunities for strong performance.

In her annual market predictions, Ms Parker also backs the mortgage arbitrage sector as a likely front runner, along with distressed investing, which will benefit from stabilisation in the credit markets following the extreme volatility of 2002. Structured products are also well-positioned for continued growth, as investors look to participate in the upside of hedge fund performance, whilst protecting their initial investment.