Hedge funds confident for 2013

Thumbs up hopeHedge fund managers who are bullish about a range of economic indicators in 2013 outnumber bearish managers three to one.

The managers were more optimistic than last year, when about 55% held bullish opinions, compared with 45% who were bears.

Aksia, a research firm that carried out the survey, calculates its bull/bear index by assigning respondents a score of between -1 and 1 for each of their predictions on a range of economic indicators from the S&P 500 to the Chinese GDP growth rate.

Aksia surveyed 168 managers representing about $900 billion (€696 billion) in hedge fund assets under management, which the company claims is 41% of total industry assets.

The managers were optimistic about the United States housing market, with 88% saying they believed prices had bottomed. They were also more relaxed than last year about European banks. Last year, 83% said a large sell-off of assets by European banks was likely, this year the proportion was 52%.

Respondents confirmed that institutional investors have become more important clients for hedge funds. More than two-thirds of respondents said public pension schemes were a growing part of their asset base, while 63% said funds of funds had declined as a proportion of their investor base.

Hedge fund managers were hopeful that conditions for trading were stable or improving. Sixty percent said liquidity conditions have remained the same or improved in the last 12 months, while 91% said they expected liquidity to stay stable or increase in the next 12 months.

“In last year’s survey, managers maintained cautious market outlooks as macro headwinds dominated concerns,” says the Aksia report. “However, what managers viewed as the biggest risks to markets in 2012, mainly the European crisis, political ineptitude and slowing growth, have had less of an impact than anticipated.

“This time around, managers enter the coming year with a different posture. Overall, managers appear bullish on financial assets, comfortable with the stability of financial markets and, though clearly uncertain on outcomes, less sensitive to the impact of macro/political risks.”

©2012 funds europe