Reuters – The heat is on hedge funds to outperform markets and prove their worth to skeptical investors, and to do so requires strategies based on riding out spikes in volatility, seeking liquidity and deft trading.

Returns this year will, of course, not be what they were in the over-leveraged days before the financial crisis, but convictions on one’s investment strategies and asset allocation will help the best and brightest funds survive, industry experts told the Reuters Private Equity and Hedge Funds Summit.

The strategies expected to do well include commodity trading advisors’ managed futures accounts because they can perform well in times of heightened volatility. Funds that focus on macroeconomic developments were also seen outperforming other strategies given the tremendous changes in policy affecting markets globally and risks of both deflation and inflation.

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Tags: asset-allocation, commodity trading advisors, convictions, deflation, financial crisis, futures, industry-experts, inflation, investment strategies, investors, liquidity, macroeconomic developments, reuters, spikes, summit, volatility