Hedge funds see their returns halving in 2014# Stock
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Hedge funds see their returns halving in 2014
Jenny Cosgrave | @jenny_cosgrave
Monday, 21 Jul 2014 | 8:49 AM ETCNBC.com
Hedge fund managers are expecting to deliver less than half of the returns
for their investors in 2014 that they saw last year, as fears of a
correction in stock markets mount, amid record high equity valuations.
Almost half of the 150 hedge fund managers questioned by data provider
Preqin, with a total of $380 billion of assets under management, said they
expected to deliver returns of 5 percent or less in 2014.
Some 66 percent of the managers surveyed expected to see 6 percent full year
returns or less.
Last year, hedge funds made gains of 11 percent on average for the 12 month
period ending December 2013, according to Preqin, beating the 10 percent
average gains seen in 2012.
Equities have had a solid first half this year, with stocks climbing
consistently to record highs and the S&P 500 and Nasdaq up 7 percent and 6
percent year-to-date respectively.
Japan is the only developed market that lagged in the first half, with the
Nikkei 225 off 6 percent year-to-date.
Federal Reserve Chair Janet and her fellow Fed policymakers raised concerns
about "substantially stretched valuations" in some sectors in the monetary
policy report that accompanied Yellen's congressional testimony last week.
Equity allocations hit their second-highest level in 13 years this month,
with some 61 percent of investors now overweight stocks, according to Bank
of America Merrill Lynch global fund management report for July.
The bank said fund managers' allocations to stocks are looking "stretched",
and could be followed by an autumn correction, with equities more pricey
than at any other time since May 2000.
Earlier this month, billionaire activist investor Carl Icahn also warned
investors they should tread carefully, after the run-up in U.S. stocks.
Jenny Cosgrave | @jenny_cosgrave
Monday, 21 Jul 2014 | 8:49 AM ETCNBC.com
Hedge fund managers are expecting to deliver less than half of the returns
for their investors in 2014 that they saw last year, as fears of a
correction in stock markets mount, amid record high equity valuations.
Almost half of the 150 hedge fund managers questioned by data provider
Preqin, with a total of $380 billion of assets under management, said they
expected to deliver returns of 5 percent or less in 2014.
Some 66 percent of the managers surveyed expected to see 6 percent full year
returns or less.
Last year, hedge funds made gains of 11 percent on average for the 12 month
period ending December 2013, according to Preqin, beating the 10 percent
average gains seen in 2012.
Equities have had a solid first half this year, with stocks climbing
consistently to record highs and the S&P 500 and Nasdaq up 7 percent and 6
percent year-to-date respectively.
Japan is the only developed market that lagged in the first half, with the
Nikkei 225 off 6 percent year-to-date.
Federal Reserve Chair Janet and her fellow Fed policymakers raised concerns
about "substantially stretched valuations" in some sectors in the monetary
policy report that accompanied Yellen's congressional testimony last week.
Equity allocations hit their second-highest level in 13 years this month,
with some 61 percent of investors now overweight stocks, according to Bank
of America Merrill Lynch global fund management report for July.
The bank said fund managers' allocations to stocks are looking "stretched",
and could be followed by an autumn correction, with equities more pricey
than at any other time since May 2000.
Earlier this month, billionaire activist investor Carl Icahn also warned
investors they should tread carefully, after the run-up in U.S. stocks.