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.<\/p>\n
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.<\/p>\n
Citigroup noted, however, that both performances were below the 11.4 percent average for the past decade.<\/p>\n
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.<\/p>\n
“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.<\/p>\n
“In addition, the significant capital in the hands of private equity funds should be supportive for event-driven equity and merger-focused managers.”<\/p>\n