Tue, May 3, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Fund of fund group International Asset Management presents its 2011 strategy outlook

Thursday, February 10, 2011

Morten Spenner
Opalesque Industry Update – Morten Spenner, CEO at International Asset Management Limited (IAM), one of the oldest specialist independent fund of hedge funds managers, outlines IAM's outlook across a range of strategies for 2011. These include Long/Short Equity, Credit, Macro, Event Driven, Fixed Income Relative Value and CTAs.

Long/Short Equity

Positive return outlook with medium risk outlook

  • Asian and Emerging Markets continue to offer the highest secular growth opportunities while the US economy remains at the head of the recovery amongst the other developed countries.
  • Sovereign debt concerns, potential increases to base rates and tightening monetary conditions in China will create headwinds for investors and managers may well have to navigate equity market corrections along the way.
  • Last year downside protection in equity long/short strategies were robust and in line with historic averages. We expect this downside capture profile to be maintained this year but for the strategy to offer attractive risk/rewards as the capture by managers of upside returns reverts to historic norms.
Credit

Positive return outlook with medium risk outlook

  • Structural market inefficiencies brought about by the stratified traditional investor base creates opportunities through mispricings. While bond and loan prices have generally strengthened, there remain pockets of value on the long side.
  • The large volume of debt maturing after 2011 should provide managers with interesting potential trades on both sides of their portfolios.
  • Differentiation in credit quality, continued valuation anomalies and potential for further stress continue to create a reasonable opportunity set, albeit within what has recently been a more difficult trading environment.
  • Managers with a long/short approach in the strategy with fundamental credit, balance sheet analysis skills and technical trading experience are favoured.
Macro

Neutral return outlook with high risk outlook

  • Trading at the front end of curves will remain tactical but curve trades have gained more traction and more of the curve length is now being used by managers. Large amounts of Treasury issuance add to the opportunity set. H
  • igh levels of expected underlying market volatility should continue to provide trading opportunities.
  • Managers that have a bias towards either commodities or Emerging Markets are favoured. Strong risk management skills in these areas are essential. Managers focused on fixed income markets should also have the opportunity to provide reasonable returns.
Event Driven

Positive return outlook with medium risk outlook

  • More constructive conditions in equity markets, high corporate cash levels and strategic need for deals are likely to lead to further increases in M&A volumes. The low interest environment may also encourage further LBO activity.
  • The current opportunity set for managers focused on distressed has diminished, however, default rates for companies with capital structures of less than $1bn are not improving in line with the larger cap companies and this may provide opportunities to those investors with strong sourcing and workout capabilities.
  • We currently favour those Multi-Strategy Event Driven managers that can be selective across a wide range of opportunities in equity and credit related event strategies across the capital structure.
  • There is the potential for higher returns from some specialist managers focused on niche areas of the credit markets.
Fixed Income Relative Value

Neutral return outlook with medium risk outlook

  • Bond volatility has risen again across various measures and this will continue to help create opportunities for trading orientated managers. It is anticipated that reasonably high levels of volatility will remain and that trading will be more active.
  • The size of government auctions in the US remains massive. The ongoing need for these auctions to be successful and the scale of the issuance across the curve every month is providing recurrent trading opportunities.
  • Although increased volatility in bond markets has now created more potential opportunities for curve trading, managers will need to remain nimble.
Trend Followers/CTAs

Neutral return outlook with high risk outlook

  • In the longer-term, we continue to favour highly experienced managers that constantly evolve their trading models and invest in their infrastructure and systems.
  • CTAs exposure still provides good diversification benefits to portfolios but this benefit is currently reduced by their present long equity and commodities biases however we believe the trends in equities and commodities are most likely to drive positive returns this year. Source

    (press release)
    bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  2. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n