AIMA confidence index finds hedge funds cautiously optimistic for year ahead

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Hedge fund manager confidence for the coming year was up slightly at the end of Q1 2023, according to AIMA's 10th quarterly Hedge Fund Confidence Index (HFCI), produced in partnership with Simmons & Simmons and Seward and Kissel.

Based on a sample of 272 hedge funds (accounting for approximately $1.9 trillion in assets) that participated in the industry poll taken throughout the week ending 31 March 2023, the average measure of confidence in the economic prospects of their business over the coming 12 months is +16.3, marking an improvement in sentiment since the end of last year, albeit trending slightly below the historical average.

On a regional basis, the UK remains the standout in terms of consistently high confidence relative to other comparable peers with a score of +18 ahead of North America (+16.4). The UK’s pool of respondents is dominated by relatively large long-short equity, global macro and multi-strategy funds all of which were among the most confident strategies. 

Elsewhere, EMEA (ex-UK) was notable for being extremely overweight fund managers based in the Middle East. Taken alone, Middle Eastern fund managers reported an average confidence score of +22.6. Similar to the UK, these fund managers are most likely to be larger and follow long-short equity of global macro strategies. It also had 100% of respondents reporting a positive sentiment score.

APAC’s confidence score of +10.6 meanwhile, is dragged down by half of the population of respondents being smaller managers, as well as some extreme scorsd from global macro managers, fund of funds, long-short equity managers across the region, which all reported an average score around -20. 

Tom Kehoe, Global Head of Research and Communications at AIMA, said: “Despite the March madness that beset global financial markets, hedge funds remain cautiously optimistic, with the current environment also presenting investment opportunities. Further reasons for optimism include increased hedge fund appetite among investors looking to best preserve their savings while the pipeline for new fund launches is slowly picking up.”

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