Money managers under the microscope
After a year in which buying the assets that had been sold down most in 2008 often proved the best strategy, 2010 looks an altogether different proposition.
The huge gains seen this year — stock markets rebounded more than 50 pct from their March lows, while some credits performed even better — are unlikely to be repeated, managers feel, and so discerning between different winners and losers from the credit crisis will the name of the game.
Yesterday we ran a story highlighting how funds of funds managers are backing global macro and long-short equity for next year.
The theory for macro is that different countries will emerge from the global economic downturn at different speeds (we’ve already seen this with the UK still being in recession in Q3, while France was already growing in Q2).
This should mean that the ultra-loose monetary policy brought in to try and avert a depression should be withdrawn by different countries at different times and at different paces — a great environment for discretionary global macro managers to get involved in and generate alpha.
For long-short equity, the theory is that 2010 will see an increasing divergence in performance between companies doing well and having access to finance in a tough operating environment and those whose business models are found out.
Patrick Armstrong, one of the former Insight fund of funds managers who set up Armstrong Investment Managers this year, agrees.
“The potential for global macro strategies is high in this type of environment,” he says in his 2010 outlook. ”There will be many opportunities on both the long and short side of most asset classes.
“We expect an end to the one way direction for all risk assets, but there will be an abundant amount of trading opportunities and dislocations of capital to provide significant potential to a wide array of alpha managers over 2010.”
A Merry Christmas to all our readers!