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FRM predicts compelling case for active management

Tuesday, January 08, 2013
Opalesque Industry Update - FRM, Man Group's $19.5bn fund of funds and managed account business has published its 'early view' on hedge funds.

Market outlook

  • Fiscal reformation across developed markets will continue to be a dominant factor on market price action through 2013 and beyond.
  • In the US, the next milestones will be the final decisions on spending cuts and the debt ceiling deadline, both of which fall on 1 March 2013.
  • In Europe, politics is likely to provide the potential stumbling-blocks. The Italian elections in February are the first test, and afterwards it difficult to see how any concrete decisions related to the fiscal compact might be agreed before the German election takes place in September.
  • Emerging markets in aggregate appear to be relatively stable with modest growth expectations over the coming period.

Hedge fund outlook

  • The outlook for traditional investments is uncertain: risk-free assets have negative real yields and the likelihood of an increase in short-term rates appear to be slim to none.
  • With the outlook for passive investing so poor, the case for active management is even more compelling. As a result, investors are continuing to allocate to active management in order to achieve the desired outcomes from their portfolios, as evidenced by the growth of the hedge fund industry in 2012 and expectations of further growth in 2013.
  • It is our long-term expectation that this delivery of absolute returns will continue to be at the core of hedge fund investing.

Press release

bc

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