Blogs
Happier Days Ahead
Jamie Murray
25 February 2010
After the festivities of the Broadgate Mainland annual party last night, it was a bit of a shock finding myself speaking to 120 people at one of our regular hedge fund breakfasts. Fortunately I had a (relatively) clear head and the coffee certainly helped! I presented to the assembled throng the results of our third “State of the Hedge Fund Industry” survey. Happily I was able to show increasing optimism on prospects for the industry this year. The key findings can be summarised as follows:
Performance – A typical hedge fund will show a net of fees return between 5% and 10% in 2010 (slightly down on 2009). The best performing strategy is expected to be macro, closely followed by long/ short equity. Distressed credit and emerging markets are also seen as attractive strategies. Macro has dominated the popularity rankings for the last 12 months.
Global economy and markets – The hedge fund industry seems to be more pessimistic about the global recovery than the IMF, World Bank or institutions such as Goldman Sachs and Morgan Stanley. However, risk appetite is seen to be returning and should benefit equities and commodities.
a meaningful proportion of responses predicted assets to grow by 33% or more during the year
Size of the industry – 80% expected the industry to show modest asset growth in 2010. Of these, a meaningful proportion expect assets to grow by 33% or more during the year. I like their attitude but would be amazed if we saw 33% asset growth this year. Let’s hope I am wrong.
We also asked managers to tell us what would be the leading trends in 2010. Unsurprisingly, many cited the increasing institutionalisation of the industry and the growth of managed account platforms. Also, there was support for strong growth in the number of UCITS III related launches. None of which will surprise close followers of the industry. However, managers did pooh-pooh the idea of a strong return of high net worth investors during 2010 as well as there being much interest for hedge fund replication products.
So, positive performance, asset growth, a returning risk appetite and an industry moving fast towards institutionalisation. If you want to have a look at my short presentation, please click on the link to teh attached .pdf file.
We have had good responses to our surveys up to now, but we would love to have plenty more. If you are not already participating, please let me know by emailing jmurray@broadgatemainland.com and I will make sure you are included next time. Look out for the next survey in about 3 months time, and please, please respond to it!
Please click here to view further details of the results.
