Metacapital's Narula: '14 Promises Challenges

Nov 21 2013 | 10:48am ET

This year hasn't exactly been a cakewalk for hedge funds, but one prominent manager is bracing for worse in 2014.

Next year will prove "a more challenging year" than this one, according to Deepak Narula. The Metacapital Management chief warned the Reuters Global Investment Summit that there was more volatility on the horizon, and that the days of regular double-digit returns are over.

Metacapital itself rose 40% last year, but, "absent some large shock to the system, those returns are history." Metacapital's flagship is up only 8% this year, although a new fund betting on rising interest rates has jumped 14%.

"When valuations are high, risk is much greater," he said yesterday. "Throw in changes to the Fed and the Fed's large footprint in the financial markets, which has to change."

"Bonds outright, I'd be even more scared about than equities," Narula continued.

Still, all hope is not lost: Narula said that mortgage bets offer promise in 2014.

"All else the same, mortgage rates have to go up," he said. "The securities that benefit from that are those mortgage derivatives." Narula also said that commercial mortgage-backed securities are attractive.


In Depth

Steinbrugge: Will Hedge Funds Help or Hurt During the Next Market Correction?

Sep 7 2016 | 11:55pm ET

Most investors have become accustomed to quick rebounds when markets correct, but...

Lifestyle

Quattrex Sports AG Debuts Soccer-Focused UCITS Fund

Sep 9 2016 | 9:54pm ET

Innovative alternative investment company Quattrex Sports has unveiled a new UCITS...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...