Hedge fund managers undeterred by Brexit

A large number of hedge fund managers believe the UK’s vote to leave the EU will have a positive impact on their funds. A survey conducted by information provider Preqin found that 31% of hedge fund managers viewed Brexit as positive while no respondents thought the vote would have a negative impact. Among the 67 hedge fund managers surveyed, 21% said they would seek to make more investments in the UK over the next year and 13% over the longer term. But 11% plan to reduce their investments in the short-term and 8% in the longer term. However, the initial impact of Brexit on hedge fund performance has been mixed. While 27% of managers reported it had had a positive effect on their performance, more managers (34%) had seen a negative effect or none at all (39%). Of those that saw an impact on performance, many saw this as a minimal negative effect on absolute returns between 0% and -2.5%. According to Preqin, one manager stated that this was “outperformance relative to the public markets”. Another said “Brexit just caused more volatility [for their fund]”. While there have been reports of fund managers fleeing the UK in light of the Brexit result, according to Preqin’s survey only 3% of hedge fund managers are considering moving operations out of the UK. The overwhelming majority (80%) do not anticipate changing location. These results should not be too surprising considering that two heavyweight hedge find managers, Crispin Odey and Michael Hintze, backed the leave campaign. ©2016 funds europe

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