A new survey of more than 70 U.S. hedge fund managers and their advisers found that most have a broadly pessimistic view on the prospects for the U.S. economy in 2008.

According to Kinetic Partners, which provides audit and assurance, tax, regulatory risk and compliance services to the investment industry, 75% of managers believe the Dow Jones Industrial Average will show negative returns in 2008 and 80% say that the U.S. economy will be stagnant or in recession at the end of the year. And the vast majority of hedge funds believe the Federal Reserve will keep a tight rein on interest rates

Julian Korek, a member of Kinetic Partners, said: “The hedge fund industry has suffered hard in the credit crunch, as asset values tumble and prime brokers put a choke on new financing. Our survey suggests that the US hedge fund community sees little improvement before the end of the year, and that the slowdown will continue.”