Hedge Fund Poll Forecasts Returns Of 8% To 9.5% For 2005

by Phillip Morton, Investors Offshore.com

08 July 2005

Hedge fund strategies as a whole will achieve returns of between 8% and 9.5% in 2005, according to a survey of hedge fund managers and investors conducted by Tanya Styblo Beder, chief executive of Tribeca Global Management LLC.

Presenting her findings at the Italian Stock Exchange's recent hedge fund conference, Stybo Beder explained that the least optimistic group appeared to be the fund of hedge funds managers, while the most optimistic tended to be the investors themselves, with the single hedge fund managers in between.

Interestingly, she revealed that the poll was taken at the beginning of a "very ugly" two month period for hedge fund performance, which she described as the "first week of the true blood bath that happened in things like convertibles, the CDO market and some of the correlation strategies".

In the survey's other findings, 26% of respondents forecast that global macro strategies, which tend to take a wider, more holistic view of markets such as currencies, stock indices and interest rates in order to profit from broader trends, would perform best in 2005. Long/short equity, long/short specialty (sector specific strategies such as energy and technology-related equities), emerging markets and private equity in Asia each gained 7% of the vote for best strategy.

About one third of the respondents thought that convertible strategies would continue to underperform, while 19% expected distressed strategies, where managers seek to profit from companies teetering on the brink or bankruptcy or undergoing financial hardship, to be the worst performing strategy this year.

Noting that all hedge fund strategies have produced broadly similar returns over the last few years, Styblo Beder predicted that certain strategies will now begin to clearly outperform others in the future, particularly those where hi-tech quantitative trading systems are employed.

"It costs you upward of $50 million to put in a high tech platform to do this kind of trading, but it is also one of the places where there are high returns," she noted.

Recommended