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Money managers under the microscope

from Global Investing:

Banks lead the equity sector flows

Banks and financials stocks have had a pretty good year. The Thomson Reuters Global Financials index is up by more than 20% in the last 12 months, and although the detritus of the financial crisis still offers the occasional sting, investors are starting to see brighter spots for the industry.

That confidence is increasingly obvious in the fund flows.

Our corporate cousins at Lipper track more than 7,000 mutual funds and ETFs which are dedicated to specific industry sectors. Dig a little into the data in this subset of funds, and you start to get a pretty good picture of where the biggest bets have been placed.

Just shy of 500 of these funds are focused entirely on banks & financials. Together they hold more than $46 billion in assets.

Last month, they suffered a total net outflow of just about $1 billion, but on a one-year view, 10 months of net inflows have driven an injection of over $10 billion. It amounts to a concerted bet on the sector, particularly in the U.S. where the bulk of assets are held, with the inflows equating to 22% of the latest published assets under management. You can see the evolution over the year in the chart below; cumulative gains or losses over the 12 months are shown in the blue area; monthly flows are shown by the red bars.

from Global Investing:

Hedge fund boss Baha sees gold at $3,000-$5,000

Christian Baha, the head of Austrian fund firm Superfund and representative of the hedge fund industry in Oliver Stone movie Wall Street 2: Money Never Sleeps, is predicting that the gold price could rise to between $3,000 and $5,000 over the next five to 10 years.

Baha, who says he has more than half his personal wealth in gold and silver, either physically or in units in Superfund funds denominated in the precious metals, believes that an unprecedented phase of quantitative easing by central banks is driving a bubble in government bonds, but that gold offers real value.

from Jeremy Gaunt:

Don’t invest in gold?

Bit of fun, this -- and might raise some issues about returning to the Gold Standard. The S&P 500 stock index priced in gold (thanks to Reuters graphics whiz Scott Barber):

Equities - SP 500 priced in dollars and gold

from Global Investing:

What fund managers think

Bank of America-Merrill Lynch's monthly poll of around 200 fund managers had a few nuggets in the June version, aside from the usual mood-taking.

Gold is too expensive.  A net 27 percent of respondent thought it overvalued, up from 13 percent in May. Then again, the respondents to this poll have reckoned gold is too pricey since September 2009.

Noster stays cautious

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Equities continue to steam ahead but at least one hedge fund manager is wary.

RTXA16VNoster Capital’s Pedro de Noronha is currently short the S&P 500, believing valuations are too high.

In addition, he sees a longer-term threat in the form of demographics: ‘baby boomers’ are now hitting retirement and will be selling equities to fund their annuity purchases, he argues.

Gold – “the most dangerous asset”

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A controversial call from hedge fund veteran Alan Miller.

RTR246NKThe ex-New Star CIO, now a partner at Spencer-Churchill Miller Private, warns that the most dangerous asset to buy is gold, which is near a 3-week high of $1,128 an ounce.

“I realise that I will be burned at the stake for being a heretic but the most dangerous asset must be gold,” he writes.

Morning line-up

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Hedge fund stories from the past 24 hours from Reuters and elsewhere:

rtxcg5sSEC war on hedge’s derivatives – NY Post

Hedge funds could nab $11 bln from Lehman – Alphaville

Galleon brought down by beauty queen – Huffington Post

Hedgies pump up stock exposure – Reuters

Hedge fund giants get gold bug – WSJ

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