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Bailey McCann, Opalesque New York: 2023 could be a strong year for hedge funds, according to global asset manager abrdn. The firm has released its first quarter hedge fund outlook and in it, suggests that discretionary macro strategies, merger arbitrage strategies, and relative value strategies could be well positioned for the current market environment.
The outlook says that discretionary macro strategies in particular could do well given the variety of themes in the market right now including persistent inflation and rising rates. "We believe that directional and relative value opportunities in interest rates will reward a number of more experienced managers, used to different rates policies and inflation regimes," the report says.
abrdn is also positive on merger arbitrage strategies which may come as a surprise to some given the relatively slow pace of M&A announcements. The firm, however, is looking past longer deal timelines and wider spreads to focus on mispricings. The outlook says experienced merger arbitrage managers may be able to take advantage of these mispricings to find positive trading opportunities.
"The positive interest rate carry associated with a deal spread outweighs our concerns around re-investment risk given our expectation for lower levels of deal activity in 2023 than we have seen in recent years," the report says. "Increased deal volumes don't necessarily translate to better returns, but our research does suggest that higher interes...................... To view our full article Click here
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