Reuters – Traditional long-only mutual funds are set to dominate shareholder registers again as the hedge fund industry shrinks and retail investors continue to stay away, according to Morgan Stanley.

Meanwhile, with institutions, including hedge funds, deleveraging aggressively, emerging markets equity issuance is set to fall to 10 percent of total volume in Europe, Middle East and Africa in 2009 from one quarter this year, the bank told the Reuters Global Finance Summit.

"Traditional classic long-only funds, which used to be the main part of shareholder registrar in the 1990s, will become more important," said Emmanuel Gueroult, head of EMEA equity capital markets.

"The hedge fund industry is deleveraging…Access to credit is difficult."

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guardian.co.uk – Bolder hedge funds are looking to snap up convertible bonds at bargain prices, returning to an asset class that became a no-go area for them only a short while ago.

But yields are now reaching all-time highs and are starting to attract the first daring hedge funds back to the investment arena they traditionally dominated.

"You can buy a convertible right now on a 25 percent discount to the same bond issued by the same company," Emmanuel Roman of GLG Partners, one of Europe’s biggest hedge funds, told a recent conference.

"You get a 25 percent discount plus a call option. That doesn’t make any sense," he said.

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