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Reuters – The heat is on hedge funds to outperform markets and prove their worth to skeptical investors, and to do so requires strategies based on riding out spikes in volatility, seeking liquidity and deft trading.
Returns this year will, of course, not be what they were in the over-leveraged days before the financial crisis, but convictions on one’s investment strategies and asset allocation will help the best and brightest funds survive, industry experts told the Reuters Private Equity and Hedge Funds Summit.
The strategies expected to do well include commodity trading advisors’ managed futures accounts because they can perform well in times of heightened volatility. Funds that focus on macroeconomic developments were also seen outperforming other strategies given the tremendous changes in policy affecting markets globally and risks of both deflation and inflation.
Bloomberg – Liongate Capital Management LLP, a London-based firm managing $2.2 billion, plans to raise $500 million for a fund of commodity hedge funds.
The Liongate Commodities Fund returned about 0.1 percent last year and 0.3 percent in January, when it operated with the firm’s capital of $40 million, the company said in a statement and a presentation. The Reuters/Jefferies CRB Index tracking 19 commodities lost 39 percent in the 13 months through Jan. 30.
“It’s an inauspicious time to invest in commodities,” said Tim Price, director of investments at London-based PFP Wealth Management, a financial adviser. “In the longer term, a shift to an inflation bias from the current deflation would represent a huge opportunity.”
Reuters – Officials from the Federal Reserve and the European Central Bank on Sunday vowed to fight the damaging effects of deflation as the global economy suffers a deep and lengthy recession.
In just a few months, central bankers’ concerns have flipped from fighting inflation to staving off possible deflation — a condition in which falling prices cause consumers and businesses to delay purchases, resulting in an even steeper economic downturn.
Both Janet Yellen, president of the San Francisco Federal Reserve Bank, and Lucas Papademos, vice president of the ECB, highlighted the risks of deflation at the annual meeting of the American Economics Association.
