Eighty per cent of investors believe hedge funds will provide good, long-term returns in the present economic crisis and that the heightened risk premia offers a great entry point for fresh investment, said a survey.

The survey conducted by Terrapinn, a leading global business media company and organiser of upcoming 'Hedge Funds World Middle East Conference' stated that the investors faith remained intact with fresh hedge fund investments expected in the second half of this year.

The largest investment conference in the Arab region 'Hedge Funds World Middle East' begins on March 10 at Madinat Jumeirah in Dubai.

The conference, which is celebrating its 10th anniversary, will host some of the world’s hedge fund legends such as John Paulson of Paulson & Co, Leon Cooperman of Omega Advisors, Ian Wace of Marshall Wace and Joseph DiMenna of Zweig DiMenna.

Other speakers include Ahmed Bin Sulayem, executive chairman, Dubai Multi Commodities Centre Authority, Kevin Birkett, executive director of Asset Management at the DIFC Authority and Eric Meyer, chairman and CEO of Shariah Capital and board member of DSAM.

An awards ceremony will also be held on the first day of the conference to celebrate regional hedge fund industry leaders.

Symon Rubens, managing director of Terrapinn ME said the dialogue between investors, hedge fund managers and service providers this year is expected to be one of the most fascinating and stimulating discussions the industry has had in a decade.

'The conference is held against a backdrop of a changing world in changing economies which still offer opportunities for serious players,' he noted.

The survey, which was conducted amongst 269 institutional investors, fund managers and service providers from around the world and the Middle East, revealed that 39 per cent of investors believe that the current depressed markets and heightened risk premia offer a great entry point for fresh investment.

'Unsurprisingly, the hedge funds themselves are even more optimistic, with 55 per cent of hedge funds stating that the current environment offers exceptional opportunity,' Rubens pointed out.

Responses also showed that there was widespread agreement across the three categories with regard to the reforms that are required, with one exception – the prickly issue of fees.

Investors, fund managers and service providers all agreed that the industry needs to have better transparency and stronger internal risk, compliance and audit functions.

They also agreed on the need to have a stronger self-regulation and statutory regulation.

While 43 per cent of investors rated the issue of fees “very important” in reviving enthusiasm, only 14 per cent of hedge funds did so, the survey said.

'It is not simply lower fees that investors want, but fees which are better structured, to align more closely hedge fund managers’ interests with those of investors,' Ruben noted.

While all categories saw better self-regulation as more important than statutory regulation, the difference between investors and hedge funds was again marked.

Thirty two per cent of investors see statutory regulation as “very important,” but only 13 per cent of hedge funds believe it to be so.

Three key lessons were almost universally acknowledged in the respondents’ feedback. Both investors and hedge funds acknowledged that independent administrators and custodians are essential and that a greater match is needed between hedge fund terms and liquidity.

A majority of hedge funds expect net inflows to the hedge fund industry to commence in the second half of this year, but most investors do not expect this to happen before 2010.

According to the survey, the size and timing of future inflows will depend largely upon two things; firstly, economic and market conditions, which are clea