Small HF Survey: Energy, Real Estate to Impact Economy Most

Mar 3 2006 | 12:00am ET

Small hedge fund managers are expecting rising energy costs and a slowdown in the real estate markets to be the two biggest factors in how the U.S. economy performs this year, according to results of a recent survey conducted by financial service provider VanthedgePoint Group. The Small Hedge Fund Manager Sentiment Survey also reveals that 44% of respondents are slightly bullish on the U.S. economy, while 32% are neutral.

When it comes to investing, 37% of respondents predict international equities will be the best performing asset class this year, while 30% think commodities will be tops and 30% place U.S. equities as the best performer. Meanwhile, 49% expect real estate to be the worst performing asset class.

One result that Geoffrey Tudisco, chief executive officer of VanthedgePoint, finds surprising is that 22% of respondents invest more than 20% of their portfolio in private equity while 17% invest between 6-10% in the asset class. Additionally, 44% of small hedge fund managers say they use index-based products, while another 10% are considering adding them to their portfolios.

Tudisco said his firm, which specializes in providing services to small hedge funds, conducted the survey in order to bring attention to small and emerging managers, which he believes often produce superior results than larger, more established funds.

“Small hedge funds are capable of generating more attractive returns than larger funds because they are not capacity constrained, and their small size allows them to move in and out of positions much easier than large funds,” Tudisco said.

This was the first year VanthedgePoint polled small hedge fund managers, though it plans to conduct the survey annually. The survey consisted of 41 respondents. 

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