Fund Of Hedge Funds Managers Look To Equities

by Phillip Morton, Investors Offshore.com

13 September 2005

Funds of hedge funds expect to make steady, if not spectacular, returns over the next six months, with the best opportunities seen in Japanese equities, according to a Reuters poll.

The survey, which canvassed the views of 12 funds of hedge funds managing about $76.5 billion in assets, revealed that fund managers envisage average returns for the industry over the next two quarters, particularly in the long/short equity sector - the most popular strategy, where respondents expect to allocate an average of 38% of their money over the next three months. However, fund managers are more likely to favour long, rather than short-biased plays.

The survey also showed that above average returns are expected from the Japanese equity market, thanks to the steadily improving economy and the likelihood of reforms following a victory in the polls by Prime Minister Junichiro Koizumi. Managers expect to allocate an average of 9% of assets to long/short Japanese equities over the remainder of the year.

The poll of fund managers also revealed that above average returns are expected from global macro strategies, which make bets on macro-economic trends in markets such as stock indices, commodities and currencies. It is thought that fund managers will continue to focus on the energy sector and US interest rates given the effect of Hurricane Katrina on the country's economy.

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