Hedge Execs Bet On Distressed Securities In ‘08

Jan 3 2008 | 11:32am ET

Emerging markets has been among the top hedge fund strategies for years, and easily outpaced other approaches last year. But some hedge fund executives expect its reign will end in 2008.

A new survey shows that industry leaders expect distressed securities, global macro and long/short equity funds to best emerging markets this year. The Lipper poll of 41 executives found that more than a fifth think distressed investing is the way to go in 2008. Another 17.5% picked global macro, while 12.5% put their faith in long/short. Just 10% think emerging markets—which returned in excess of 20% last year, when many other strategies ran into difficulty—will remain on top.

Optimism about distressed securities, one of the weakest-performing strategies last year, is buoyed by Moody’s prediction that the high-yield default rate around the world will quadruple this year. But optimism is not limited to distressed strategies.

“A majority of European and U.S. single managers and fund-of-funds managers alike continue to share a very positive performance outlook through the end of 2008,” the Lipper report said.

At the same time, reflecting on last year’s credit market misery, more than 40% of survey executives expressed a desire for independent asset pricing and valuation, especially for the illiquid securities that burned so many hedge funds in 2007.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Looking for a way to keep warm during the cold weather or rather alleviate your cold while under the weather?