A Reuters poll of funds of funds published this week shows that hedge funds
are expected to make moderate profits over the coming months, with European
stock markets seen as a particularly good investment in the short-term.
The survey of 15 funds of hedge funds, which together manage some $66.5 billion,
forecast average to slightly below average positive returns over the coming
six months. Expectations were broadly unchanged from the previous two polls,
in October and December.
Results so far this year as reported by a number of hedge fund indices including
Van Hedge, CSFB/Tremont and S & P have yielded only mediocre returns, with
an average 2% rise by the end of February, although this admittedly beats most
of the major stock indices.
Reuters survey shows that long-short funds will attract the most money in the
next few months. "The outlook for equity long/short continues to look reasonably
good, and recent performance in European long/short has been impressive,"
said John Capaldi, managing director at Financial Risk Management (FRM) in London.
Amid a chorus of doom-sayers predicting that the glory days of hedge funds
are over due to overcrowding and a shortage of talented managers, the hedge
fund universe seemed to clock up gains after fees of about 10% last year, lower
than its historical average, but still better than long-term equity market returns.
Many commentators point out however that the methods used by hedge fund reporting
agencies - most of them with extensive interests in the very markets they are
reporting on - are suspect due to survivorship bias and other technical effects
which would tend to exaggerate average returns.
INVESTORSOFFSHORE.COM
