The structure of the hedge fund business is now more at risk of declining if performance is not sustained, a report by Lipper says.
This is especially true for the so-called lower-tier firms below USD250m in assets that have significant overhead and struggle to get sizeable institutional investor allocations.
Macro and discretionary managed futures managers, along with the fixed income and emerging strategies, are expected to top the performance league table in the short run. The volatility arbitrage and dedicated short-bias strategies might be a bright spot, the report says.
The euro will struggle to hold above USD1.29 on uneasiness about the economic outlook in the Eurozone as concerns mount about whether Europe’s largest economy can sustain a solid recovery.
Despite the trend pausing recently, the short-term outlook on gold remains bullish. Top US hedge fund managers’ exposure to SPDR Gold Shares remained firm at the end of the second quarter. The recent spikes in the wheat market—the price of wheat recently soared on record drought decimating Russia’s wheat crop—might lead to price pressures on the entire segment of agricultural commodities, especially corn and soybeans.
As the summer season comes to an end Eurozone peripheral debt remains vulnerable to volatility clustering. Also, new yield spread highs are triggered by flight-to-quality drivers on renewed concerns about austerity measures appearing to be unsustainable in some countries. Doubts of the long-term sustainability of public finances are mounting.
