Reuters – Citigroup wealth managers are telling their clients to expect a slightly better performance from hedge funds this year versus last but still less than long-term average gains.
In a note, the investment bank’s wealth management group projects hedge funds to return about 10 percent on average after fees. That compares with a gain of just over 9 percent in 2006 on Hedge Fund Research’s main performance index.
Citigroup noted, however, that both performances were below the 11.4 percent average for the past decade.
Ray Nolte, chief investment officer for fund of hedge funds at Citigroup Alternative Investments, said hedge fund gains should come as a result of an expected good performance on stock markets as well as merger and acquisition activity.
“The expected backdrop of solid equity-market performance in the period ahead as well as the continuation of shareholder friendly moves such as buyouts and acquisitions should afford stock-picking opportunities on both the long and short sides of the market,” he wrote.
“In addition, the significant capital in the hands of private equity funds should be supportive for event-driven equity and merger-focused managers.”
