Fixed income and CTA strategies favoured as convertible arbitrage and global macro systematic strategies loose investor interest.

GENEVA � OCTOBER 27th, 2004

TARA Capital, the Geneva based hedge fund advisory firm has released the latest results from their quarterly Hedge Fund Strategy Barometer (HFSB), which highlights intended shifts in allocations across the primary hedge fund sectors.

�Having come through a difficult period in the earlier part of the year, many investors are hoping that the recent upturn in the performance of hedge funds to their historic return pattern is a sustainable trend� according to John Lowry, CEO of Tara Capital.

This quarter�s HFSB shows that investors continue to shun Convertible Arbitrage funds while favouring another area that has disappointed of late, CTA and Managed Futures funds.

HIGHLIGHTS BY BROAD STRATEGY

Relative Value Strategies

�Having been one of the least popular strategies last winter, Fixed Income has become increasingly popular over 2004, partly reflecting an increase in the number of funds available in this area.

Equity Market Neutral Funds appear to be in for a quieter time following three-quarters of increased investor interest.

Sentiment appears to be consistently against Convertible Arbitrage where recent declines in implied volatility on longer term convertibles resulted in relatively significant losses for many funds in the sector. The CBOE Volatility Index, which measures the volatility of equity markets, dropped to levels not seen since 1997.� This reflects a complacency amongst investors, which is somewhat curious given the backdrop of concerns over growth rates and higher energy prices� commented Lowry.

Event Driven Strategies

�Multi Strategy continues to be very popular with many investors looking to increase their allocation to this area. This is in stark contrast to the pure merger area, which most investors are now ignoring.

�Although the macro economic environment has improved with a pick up in M&A transactions, returns have remained mediocre due to the relatively large amount of money chasing these deals�, commented Lowry. �In addition more deals are being broken, creating more headaches for managers and further dampening returns and investor interest�, he notes.

Somewhat more mixed are the views on the distressed area that back in the spring was the least popular strategy but is now moving into favour.

Long-Short Equity Strategies

�Solid returns from equity markets in September resulted in a sharp increase in interest for Global Long/Short strategies. Japan and US Equity also recorded a significant increase in popularity, however Emerging Markets appear to be coming off the boil in terms of new allocations. The least favoured of all strategies is Dedicated Short Sellers with not one respondent planning an increase, indicating that hedge fund allocators are generally more positive about the overall outlook for world equity markets.

Global Macro and Managed Futures Strategies

One of the most interesting results is the intended big shift back to Managed Futures and CTA strategies. Given the very disappointing relative and absolute performances from this area in aggregate, one might have expected that investors would have lost faith in the sector. This does not appear to be the case as 44% of respondents now plan to increase their allocations, up from a low of 6% in the last HFSB.

In the Global Macro area there appears to be a wide divergence between systematic and discretionary strategies. Global Macro Discretionary has been one of the most popular strategies since the HFSB was launched. After a dip in interest over the summer, it is once more one of the most popular areas. This is in stark contrast to Global Macro Systematic strategies that have been badly affected by trendless markets. For the first time since the launch of the HFSB more institutions said they would be allocating less to this strategy over those planning an increase.

ABOUT TARA CAPITAL

Tara Capital is a Geneva based investment research and advisory firm dedicated to the alternative investment industry.