ANCHOR (OFF-CAMERA) ENGLISH SAYING:

Well let me ask you, as we start off 2013, are the returns for hedge funds going to be better? When you look at some of the hedge fund indices and then you look at what the S&P did, 2012 was not the best of years.

DON STEINBRUGGE, MANAGING PARTNER, AGECROFT PARTNERS (ENGLISH) SAYING:

Yeah, the average hedge fund in 2012 was up about 6% and people's expectations for hedge funds have come down significantly. It used to be that people were expecting 10%-plus with their hedge fund investments, now they're only shooting for about 6%-8%. And 6%-8% in this type of environment is not bad. You know, I think you're going to see some pretty hefty flows go into the hedge fund industry primarily because a lot of pension funds are going to be shifting money out of fixed income which is expected to return 2.5%-3% into hedge funds where they're expecting 6%-8%.

ANCHOR (OFF-CAMERA) ENGLISH SAYING:

But why move into an actively-managed fund if you're seeing similar returns with passive funds and of course fees are lower?

DON STEINBRUGGE, MANAGING PARTNER, AGECROFT PARTNERS (ENGLISH) SAYING:

I don't think you are seeing similar returns. You know, as I mentioned on the fixed income side, going against the aggregate index...

ANCHOR (OFF-CAMERA) ENGLISH SAYING:

On equities, let's say a long-short strategy?

DON STEINBRUGGE, MANAGING PARTNER, AGECROFT PARTNERS (ENGLISH) SAYING:

Well, you know, long-short has been very difficult for people who focus on that space because equity markets have been driven by macro events. And I think going forward, you're going to see fundamentals matter. When fundamentals begin to matter and drive stock prices, you should see long-short equity managers do very well. Long-short equity managers did very well relative to the S&P the 10 years before 2008. Since then, they've underperformed the S&P 500, but I think top managers will again begin to generate some pretty strong alpha.

ANCHOR (OFF-CAMERA) ENGLISH SAYING:

What other strategies look promising this year?

DON STEINBRUGGE, MANAGING PARTNER, AGECROFT PARTNERS (ENGLISH) SAYING:

You know, I think there's still room to go in structured credit. Structured credit has done very, very well over the past couple of years. You've seen spreads come down which enhance your market value gains. But I think structured credit managers, they can also trade their portfolio; could generate lows, double digit returns. I also think private lending can do pretty well. Spreads have come down, interest rates have come down on very liquid securities. But in private lending, the spreads are still pretty wide and you'd get pretty good returns. Again, I think you can get low double digit. I think long-short equity is going to do well in 2013. And you also may see a rebound in CTAs. CTAs have lagged the past two years, they're uncorrelated with long-only benchmarks. Typically, when you see a big drawdown for CTAs, they bounce back, so 2013 could be the year for CTAs.