Look Out for Global Macro and Equity Hedge Funds in 2006

Stephen Harris

28 December 2005

The lowest hedge fund returns in three years are pushing investors towards hedge funds that invest in stocks and that bet on macroeconomic trends, as these are the strategies that are expected to see the biggest gains in 2006. “Global macro will produce the highest returns, followed by equity hedge funds. Both strategies will exceed 8 per cent next year,” Luis Rodriguez, head of risk management at New York-based Manhattan Family Office told Bloomberg. Manhattan has more than $1 billion in assets under management. According to data compiled by US-based Hedge Fund Research, long-short equity funds received almost 20 per cent of the net $47.7 billion that flowed into hedge funds during the first three quarters of this year. Global macro funds, which invest in stocks, bonds, currencies and commodities, attracted about 16 per cent of net new assets. Top of the list was event-driven funds, which accounted for about 23 per cent of the net inflows. According to Hedge Fund Research, equity hedge funds were up an average of 8.2 per cent in the first 11 months of this year, while macro funds gained 5.9 per cent and event-driven funds 5.5 per cent.