HF bosses will debate whether growth in distressed investing or profitable macro strategies offer 2008's blockbuster trade, just as short subprime was in 2007 at GAIM International 2008, held from June 17-19 in Monaco. This comes as the $2.6 trillion industry faces up to poor returns and investor outflows and searches for a follow-up to betting on falling subprime assets last year. Global macro funds, which retuned 17.36% in 2007 and 5.19% in the first four months of 2008, have been a popular choice with investors recently as other strategies have struggled.

However, not everyone is convinced such strategies, which bet on global equity markets, world currencies, sovereign debt and commodities and benefit from increased volatility, will continue to deliver. "Everyone is piling into macro and it's going to be a disaster. No-one knows where the dollar is going to go, where oil is going to go, where interest rates are going to go" says Francois Barthelemy, partner and fund manager at F&C Partners.

Meanwhile, many funds have been preparing for a return of the distressed debt cycle, in anticipation of increasing corporate defaults as economic conditions deteriorate. "A lot of people are talking about distressed funds, but until we see the banking system work through its issues we don't believe credit markets will rebound significantly," said Christopher Peel, CEO of BlackSquare Capital.