Looking Ahead to 2011: The Hedge Fund Industry Speaks (Part III)

Dec 30 2010 | 10:15am ET

As 2011 approaches, we caught up with some industry experts to ask them what they thought next year has in store for the world’s financial markets in general, and hedge funds in particular.

Here, is the third installment of responses from hedge fund industry experts, with more to come in the following days.

Jeff HollandJeff HollandJeff Holland, Managing Director, Liongate Capital Management
 
“Just as with 2010, 2011 will require an adaptive approach to capital investment. There are recent signs of optimism: ISM, retail and employment data have all picked up. Growing markets (it is time to do away with the phrase ‘emerging markets’) are proving resilient, driving global growth. These are though paired with some significant uncertainties. Sovereign debt problems (most notably in Europe) and fiscal austerity measures hang over developed markets. Inflation in growing markets and the sustainability of capital inflows are also causes for concern. In capital markets, there are opportunities nevertheless. Developed equity markets, particularly the U.S., look attractively valued, and with corporates holding some $2.5 trillion, deployment of these cash holdings will likely prove supportive. Commodity fundamentals are strong and global liquidity continues to provide opportunities for those who can exploit them. Precious metals are likely to continue to benefit from macro uncertainty and competitive currency devaluation pressures.
 
“Much of the outcome of the next year will depend on the actions of policy makers, both in regulation as well as fiscal and monetary policy actions. The fallout from the transition of private debt to public balance sheets will continue; the solution is still unclear. Emerging markets are already focusing on tightening policy stances, and developed markets will need to carefully consider this though most likely not in 2011. Deploying capital will therefore require a flexible and tactical approach as well as careful consideration of trades to hedge adverse outcomes.”

Jonathan NeillJonathan NeillJonathan Neill, Founding Director, FPP Asset Management

“Bond yields rise. The U.S. dollar rises. Equity markets rise. Confounding the skeptics.
 
“Developed markets perform at least as well as emerging markets.
 
“Within emerging markets, top performers include China, Korea, Hong Kong, Russia and Taiwan—our top weights.”

Don SteinbruggeDon SteinbruggeDon Steinbrugge, Chairman, Agecroft Partners

“In 2011 we will continue to see pension funds increasing their allocation to hedge funds, which will be the largest contributor to the growth of the hedge fund industry.
 
“2011 will be remembered as the year of compliance, during which Europe and the U.S. passed new hedge fund legislation. In the U.S., most mid- and larger-size hedge funds will be required to register with the SEC. In addition, there will be investor focus on hedge fund compliance procedures especially as they pertain to insider trading.”

Looking Ahead to 2011: The Hedge Fund Industry Speaks

Part I
- Rory Hills, Hilltop Fund Management
- Michael DeJarnette, NorthPoint Trading Partners
- Basil Williams, Concordia Advisors

Part II
- Troy Buckner, NuWave Investment Management
- Jack McDonald, Conifer Group
- Piers Denne, Future Capital Partners

Part III
- Jeff Holland, Liongate Capital Management
- Jonathan Neill, FPP Asset Management
- Don Steinbrugge, Agecroft Partners

Part IV
- Graham Stock, Insparo Asset Management
- Sal Gilbertie, Teucrium Corn Fund
- Robert Jersey, GarWood Securities
- Amit Shabi, Bernheim Dreyfus & Co.


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