Money managers under the microscope
Are we heading for another down year for hedge funds?
I ask because after a choppy six months or so, during which the FTSE 100 is down 3.6 pct, hedge funds have also lost 1.12 pct.
Some commentators are predicting a rebound in equities and other assets, but others expect further volatility, which could be harmful to funds’ returns.
Our stablemate Lipper, the fund research firm, is sticking its neck out for a better H2, arguing that earnings will surprise on the upside, double-dip fears will fade, and commodity investing will continue to throw up arbitrage opportunities. You can read Lipper’s latest report here.
I remember, at the Reuters Hedge Fund & Private Equity Summit in spring 2008, asking outspoken fund manager Hugh Hendry whether hedge funds might finish 2008 in the red after a tricky start to the year and losses of 4.4 pct in Q1.
Some good news for the bulls.
Octopus fund manager David Crawford believes this year’s equity rally could lift the FTSE 100 to the 5,000 mark, from just over 4,600 currently, helped by energy stocks.
The call backs up that from hedge fund manager Crispin Odey, who earlier this year pointed to the start of a new bull market and then recently said there is “every reason to be hopeful that a major correction will not happen before September”.
But one top hedge fund manager believes that equities could soon be heading for a very sharp rally.
Cazenove’s Neil Pegrum — whose fund made 9.4 percent last year while markets were plummeting — believes UK equities could soon be enjoying a “March 2003″ rally.
The shrinkage of the UK-listed banking sector is providing an interesting trade for Legal & General Investment Management’s $46 million Global Macro fund.
After some dramatic share price falls, banks now account for only around 10 percent of the FTSE 100. According to LGIM’s head of asset allocation David North, this means any potential damage of further bank problems to the index is likely to be a lot less from here onwards.