Is the glass half-full or glass half-empty? Panellists charged with the task of 'finding the light' at the GAIM Asia conference in Hong Kong this week were hedging.

Noting that it took 50 years for the hedge fund industry to grow to half a trillion dollars and then just five years to increase fourfold to $2 trillion, the risk caused by a lack of downside protection had been overlooked by numerous money managers. This led to predictable results as the guarantee of performance from any leveraged carry trade imploded.

"We're entering a long deflationary phase," says Xin Huang of Hong Kong fund of hedge funds Persistent Edge. "Money is being pumped into infrastructure, but that doesn't help the consumer, especially as that consumer is suffering as unemployment rises."

We all know it's not an easy environment for hedge funds, but one point that is seldom made is that hedge funds, however vilified they are by the high street press, have not, like the Bank-Rupts, stooped to asking the impoverished taxpayer for handouts.

As FRM founder Blaine Tomlinson put it in his speech: "Nobody is bailing out hedge funds because they are of low systemic risk, hedge fund failure is borne by investors in almost all cases".

That's not to say that some of the big funds might not feel like some help when their suspensions on redemptions expire, but for now, dying hedge funds have taken the honourable route and met their end phlegmatically.

"Hedge funds are a pariah in the press at the moment," says hedgie Adam Stern. "But there are some smart people who are making money and the stigma is being shaken off."

However, with hedge fund managers on stage at the GAIM conference this week (very far removed from the perception of being King Midas figures shunning the world in a Connecticut mansion), putting forward their case and defending hedge funds in an articulate way, it's got to be good for the industry.

Most of these managers believe that we are not at the start of a new bull market. "When people say it's the real thing, not a bear market rally, then it's time to sell," says Geoffrey Barker of Ballingal Capital. For now, the electricity is on but the lights are still in intermittent brown-out across Asia's markets, giving low net-exposure hedge fund managers plenty of opportunity to shine.