There has been a dramatic turnaround in sentiment among global hedge fund managers over the last 12 months, according to Aksia’s Annual Global Hedge Fund Manager Survey.
The research and portfolio advisory firm polled the opinion of 168 institutional managers across the major hedge fund strategies, which collectively account for approximately USD900bn in AUM and 41 per cent of total hedge fund industry assets.
The survey results show that managers are bullish on financial assets, comfortable with the stability of financial markets, and though clearly uncertain on outcomes, less sensitive to the impact of macro/political risks.
The survey also found that 88 per cent of managers say the US housing market has bottomed.
Fewer managers envisage a large-scale sell-off of assets by the European banks as likely, with this number falling to 52 per cent from last year’s 83 per cent. The percentage of those seeing it as “definite” dropped to just seven per cent from 29 per cent.
Concerns over counterparty risk are abating: CDS spread triggers are decreasing in importance for hedge fund managers with only 36 per cent of managers reporting their use (versus 50 per cent last year) and existing trigger levels are higher.
Emerging markets and gold are the asset classes expected to deliver the strongest performance in 2013, with more than a third of managers predicting double digit returns.
Managers are reasonably optimistic on European equities with 63 per cent predicting positive performance in the EuroStoxx 600 in 2013 and 25 per cent expecting returns in excess of 10 per cent.
Pension funds are growing in influence as fund of funds contract, with 68 per cent of managers reporting direct investments by pension funds as being the fastest growing part of their AUM whilst 63 per cent report a decline in fund of funds' allocations.
Jim Vos, chief executive at Aksia, says: “This survey appears to show that managers are looking through much of the ‘noise’ and headlines that bombard us daily. At a minimum, it illustrates a belief in near term stability in the markets and less concern about left-tail risks.”