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Table: Outlook for capacity of current strategies

Outlook for Capacity of Current Strategies
Strategy Current situation Acceptable Outlook
Aggressive growth Good Acceptable
Emerging markets Good Acceptable
Futures Good Good
Macro Good Good
Market neutral Good Good (with Europe included)
Multi-stategy Good Good
Opportunistic Good Acceptable
Special situations Good Good
Value Good Good

Strategy                                             Moderately Stressed Outlook
Fixed income arbitrage Narrowly defined strategies – stressed                                                            Some relief in non-US markets
Broadly defined strategies – acceptable
Income Narrowly defined - close to stressing, depends on strategy Acceptable with new instruments and strategies in US and non-US markets
Merger/risk arbitrage Stressed but will recover somewhat with economy Acceptable to good
Distressed securities Good, starting to be under some pressure in US Good opportunities in Europe

Strategy Stressed Outlook
Market timing Virtually dead in US for local reasons Alive offshore Acceptable outside US
Pure short selling                             Acceptable to stressed, depending on manager                  Difficult due to nature of strategy
Statistical arbitrage Stressed May be acceptable with non-US markets
Convertible arbitrage Stressed, improving Some relief in non-US markets
Source: Van Hedge Advisors

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