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Hans Peterson By Beverly Chandler, Opalesque London:

The latest edition of SEB’s Investment Outlook is positive on the potential returns of hedge funds over the next one to two years. Expecting returns of 6% with risk of 7%, the report says that hedge funds are generally in a significantly more stable situation, with greater preparedness to face an economic downturn. SEB believes that the prevailing market climate favours Global Macro strategies, among others. The report says: "There are more factors than usual for investors to keep in mind before deciding where to put their money, despite relatively low valuations in the stock market. "Is it time to buy?" is a highly individual question with individual answers. SEB’s main scenario is that the economic upturn will continue but at a slower pace."

The study finds that equities and private equity still have the best potential for returns over a one to two year perspective. "But the risk level is rising, and the voyage ahead may include a lot of rough seas with violent movements between peaks and troughs. For risk-averse investors, hedge funds, High Yield bonds and to some extent commodities are better choices" the report says.

"We have reached a situation where investors have to ask themselves whether capital or returns should be their main focus. And this will be a balancing act, where the simple truth is that yesterday’s truths are today’s untruths," says Hans Peterson, Global Head of Inv......................

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