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Matthias Knab, Opalesque: Franklin Templeton Investments writes on Harvest Exchange:
Truth be told, 2016 was not a stellar year for hedge funds, as unceremoniously summed in this headline from The Economist on December 19, 2016, "Multi-manager hedge funds lost cash, cachet in 2016."
That said, a new leaf seems to have been turned this year with hedge funds returning to positive flows in the first quarter of 2017. Renewed interest has been spurred by the election of Donald Trump as president of the United States, which some industry experts are predicting should bring meaningful tax reform, deregulation and infrastructure spending that we think could prove a boon to hedge strategies.
While we are in the early days of this new administration and Trump's presidency has already faced some challenges, we are optimistic about the future of the hedge-fund industry. We think many strategies could perform better this year, as increased volatility and dispersion among equities (generally a good thing for hedge-fund managers) should persist, reversing a multi-year trend.
Furthermore, with US equity markets reaching new highs and the interest-rate environment looking negative for bonds, we believe investors will seek out product offerings from alternative managers that can offer access to alpha across alternative asset classes.
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