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Good climate for hedge fund managers
19 June 2013
SEB outlines mildly positive market prospects and a belief in rising markets and value generation
In its Investment Outlook: Rising values in sight, SEB highlights that better opportunities are arising for hedge funds due to more stable markets.
The report stated that in the first quarter of 2013, hedge funds had already generated a return in line with full-year 2012. “Since the fourth quarter of last year, the markets have gradually returned to being governed by company and macroeconomic fundamentals, which has been a good climate for hedge fund managers,” the report cited.
There is variation within and between strategies and equity long/short and event-driven strategies have benefited most from more normalised market conditions, with gains of over 5% this year.
Meanwhile, macro/CTA (strategies based on mathematical models) has stayed just above zero, which is lower than SEB expected, but there is considerable variation among hedge fund managers. The report added that there is still good potential for every strategy, while more sustained trends should favour CTA, large global imbalances create opportunities for both relative value and macro strategies.
“Market players’ growing focus on company fundamentals bode well for equity L/S, while companies’ large cash holdings can be used for acquisitions, which should favour event driven and distressed strategies in particular,” said the report.