Hedge Funds Bullish 2012
Hedge Funds Placing Bullish Bets on a Better 2012
Hedge funds are betting on the bull this year, as many fund managers believe that the US and Chinese economies will perform better than once feared and the EuroZone crisis will not be as bad as many thought in 2011. That's not to say that hedge funds believe that everything will be neatly resolved in 2012, but managers are looking for a strong recovery by the U.S., a soft landing for China and some stability for Europe's banks after actions taken by the European Central Bank.
The average hedge fund rose 2.6 percent in January but this was behind the S&P's .SPX 4.5 percent gain, according to Hedge Fund Research, and some funds missed out on the rally after taking a cautious stance towards the end of a turbulent 2011.
Many managers are now hiking borrowing to make their favourite bets punchier, or shifting the balance between their long and shorts to help them profit from market gains.
"What we're hearing from a number of managers is that the appetite for risk has risen," said Frank Frecentese, global head of hedge fund investments at Citi Private Bank.
"Their view on Europe is that the possibility of an extreme left-tail event has lessened, the U.S. is doing moderately better than expected and the risk of China ... heading for a hard landing has lessened."
The FTSEurofirst 300 .FTEU3 of top European shares is up 8.3 percent so far this year. Source
Related to: Hedge Fund Update
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