In this report, we discuss the results of a survey of more than 80 hedge fund managers (total AuM above USD 1,000bn) conducted at end-December 2014. Managers were asked to express their views for 2015 on global monetary policy, equities, fixed income, credit and FX. They were also asked to provide their views on the hedge fund industry.
Head of Research – Managed Account Platform
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In this report, we discuss the results of a survey of more than 80 hedge fund managers (total AuM above USD 1,000bn) conducted at end-December 2014. Managers were asked to express their views for 2015 on global monetary policy, equities, fixed income, credit and FX. They were also asked to provide their views on the hedge fund industry.
• US: Hedge fund managers remain bullish on US equities for 2015 on the back of accommodative monetary conditions. Almost 70% of the respondents do not expect the Fed to raise rates in the first half of 2015. This percentage has increased from 50% in June, when we conducted the previous survey. At the same time, fixed income is not expected to be an attractive asset class in 2015, even if 10y bond yields in the US should not reach 3%.
• Japan: Managers expressed a positive stance on Japanese equities for 2015 on the back of the new political context and the aggressive stance of the BoJ. Incidentally, our previous survey conducted in June correctly signalled the expansion of the BoJ’s asset purchase programme in H2 14.
• Europe: The vast majority of managers expect the ECB to purchase sovereign bonds this year. However, only a small majority expects European equities to outperform US equities. The EURUSD is expected to remain below 1.2 throughout the year and 10y Bund yields are expected to be below 0.5%.
• Risks: Managers continue to express caution regarding US high yield. This echoes the concerns expressed in our previous survey in June, which anticipated the sharp widening in spreads (+180 bps since 30 June 2014). According to our survey, 85% of respondents expect further HY spread widening in the US or at best stabilisation. Still on a cautious note, managers expressed concerns over slowing growth in China, the geopolitical context in Russia and Greece’s potential debt restructuring and its implications for the euro area.
• Hedge Fund industry: Asked about the evolution of their investor base, hedge funds reported that they are continuing to receive inflows from institutionals and are planning new hires in the research/ PM areas. The rise of liquid alternatives is not reported to have any influence on their investment process. 56% of the managers surveyed believe that they will deliver returns in the 5-10% range (40% expect to deliver above 10%).
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