Fri, Jan 19, 2018
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. U.S. economy, inflation and alternative investments to dominate 2018 markets, says family office Wilmington Trust[more]

    Komfie Manalo, Opalesque Asia: The emergence of a late-cycle economy in the U.S., the mystery of inflation and growth from a domestic and global perspective, and the potential for alternative investments to prosper against a backdrop of rich valuations, low yields, and higher volatility are the t

  2. Performance - Some hedge funds deliver double-digit gains for 2017, Brevan Howard's hedge fund suffers biggest annual loss in 2017, Crispin Odey's flagship hedge fund plummeted about 20% in 2017, Profits fall 90% at ex-Morgan Stanley banker's hedge fund, Fannie-Freddie overhaul might mint hedge fund riches, losses[more]

    Some hedge funds deliver double-digit gains for 2017 From Reuters/Investing.com: A handful of hedge funds ended 2017 with double digit returns, their investors said, at a time the $3 trillion industry took in fresh money and posted its best returns in years, industry data show. Act

  3. Investing - Hedge funds start 2018 with record $19 billion bet on the euro, Hedge fund Kora Management invests in Satin Creditcare[more]

    Hedge funds start 2018 with record $19 billion bet on the euro From Reuters.com: Hedge funds have kicked off 2018 with their biggest bet ever on the euro rising, a clear vote of confidence in the single currency but, with positioning so stretched, one which could backfire in the near ter

  4. News Briefs - Mobius to retire from Franklin Templeton, Authorities decrypt smart phone of Princeton grad charged with killing Manhattan hedge fund dad, Investigators seize (more) antiques from hedge-fund billionaire Michael Steinhardt's collection[more]

    Mobius to retire from Franklin Templeton Emerging markets pioneer Mark Mobius will be stepping down as executive chairman of the Templeton Emerging Markets Group (TEMG) and formally retire from Franklin Templeton on 31 January. He will also be relinquishing his post as portfolio manager

  5. Comment - Seeding arrangements: Structure, approach, and the current market[more]

    From international law firm K&L Gates: Private fund growth has exploded over the last several years. While some areas are hotter than others, overall the industry has seen substantial growth. Existing managers have been able to launch larger funds and new managers have been able to successfully ente