Bermuda will today host one major hedge fund conference and plug itself as a leading fund domicile at another, as the industry goes through a period of dramatic transformation.

Top hedge fund managers and some of their biggest investors will converge on the Fairmont Southampton today for the Institutional Investor's Alpha Hedge 15th Annual Global Hedge Fund Summit.

And in New York, the Bermuda International Business Association (BIBA) will be participating in the GAIM Fund of Funds Conference at the Grand Hyatt — reputedly the largest gathering of hedge funds and their investors in the world.

There are reportedly around 10,000 hedge funds with an estimated $1.7 trillion in assets. But during the financial turmoil and unprecedented market volatility of the past few weeks, investors have been pulling out their money at a furious rate.

As a result, the industry is shrinking. Hedge funds selling off their assets in a hurry have been blamed for exacerbating the dramatic falls seen on equity markets.

Many hedge funds are highly leveraged and have been forced to dump their equity holdings because of margin calls. This has played out in the form of widespread deleveraging — the selling of portfolio assets to reduce the funds' borrowings against those assets.

Last week it emerged that the Bermuda-based Millennium Global Emerging Credit Fund, which was reported to have boasted assets of more than $800 million, as of August 29, is undergoing liquidation.

In a Bloomberg report last week Manny Roman, co-chief executive of GLG Partners, the New York-listed multi-strategy alternative asset manager, was quoted as saying that a third of hedge funds could go out of business during the financial crisis.

He added: "In a fairly Darwinian manner, many hedge funds will simply disappear."

Against this background of an industry in crisis, "Sailing Through The Global Storm" will be the first topic discussed during the two-day conference in Southampton.

Ken Tropin, chairman of Graham Capital Management will be joined by Israel Englander, managing member of Millennium Management and Jeffrey Solomon, managing member of Ramius Capital Group on the panel discussing the financial turmoil.

The two-day conference, which is closed to media and which is expected to attract some 40 high-level executives, will also feature topics such as US economic policy, climate change and sovereign wealth funds.

Stephen Lowe, the Bermuda Registrar of Companies will make a dinner speech during the event and BIBA is one of the summit's gold sponsors.

Meanwhile, as she attends the GAIM event in New York, BIBA chief executive officer Cheryl Packwood is confident that the Island can take advantage of this transitional period for the industry.

"As we have learned in our recent trips to New York, Chicago and Miami, Bermuda is well-positioned to capitalise on the current dislocations in the hedge fund marketplace today," Ms Packwood said.

"Unlike our competitors, we are focused on innovation and excellence, not duplication and mediocrity, which will serve us well as there is a flight to quality in the fund world."

Bermuda's fund management industry has grown strongly in recent years, helped by the passing of the Investment Funds Act 2006, which created a clear legal framework for funds. BIBA has travelled widely to sell the Island as a fund domicile.

BIBA representatives will be joined by a group of Bermuda international business executives to help make Bermuda's case in New York.

"Our regulatory expertise and track record are more important than ever as funds consider their domiciles of choice," Ms Packwood said. "This conference is a great opportunity to drive Bermuda's message directly to our customer base. Our country and our organisation are fortunate to have many advocates, who are so skilful and expert at delivering the Bermuda message."