Survey: Hedge Funds Expect Worst From Fed Tapering

Dec 11 2013 | 10:40am ET

Hedge fund managers polled by New York-based research firm Aksia are “overwhelmingly negative” on the potential impact of Federal Reserve tapering on markets.

Most managers surveyed expect tapering to begin during Q1 2014 and 75% of respondents expect a significant negative impact on global markets. That said, only 10% expect rising rates will hurt their strategies.

Aksia conducted the survey in late October through early November, polling 198 managers collectively managing more than $1 trillion in hedge fund assets.

"The survey gets inside the heads of managers and illustrates their opinions about both the markets and the hedge fund business," said Jim Vos, Aksia CEO, in a statement. "While altogether a fairly cynical bunch, especially when it comes to newfangled hedge fund businesses, there is also a good degree of optimism about regulatory improvements, the functioning of the markets and longer term economic prospects."

Hedge fund managers, according to the survey, hold “a very poor opinion” of global political institutions but rather like central banks, especially the Bank of Japan and that country's prime minister who were given a 'B' grade for their handling of the economy and growth stimulation. The U.S. Congress, on the other hand, merited a 'D' (and a dunce cap) with a full 38% of respondents awarding Congress an 'F.'

Aksia also discovered that the average manager estimates they need to deliver 9% annualized returns to keep investors happy; that very few managers (1%) plan to advertise despite the lifting of the ban on hedge fund advertising by the JOBS Act; that most (70%) have no plans to offer 40 Act products; and that barely 10% are actively applying environmental, social and governance policies and socially responsible investing policies to their portfolios, despite the popularity of ESG/SRI with investors.


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