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Hedgies Pick Distressed, Global Macro for \'09: Poll

Date: Friday, January 30, 2009
Author: Laurence Fletcher, Reuters.com

Hedge fund managers think strategies such as distressed securities and global macro will do best in 2009, and believe the industry's once-high fees are set to fall, a poll by research firm Lipper reveals.

The poll results, published on Thursday [Jan. 29], shows that one in five managers surveyed thought distressed strategies would top the performance tables in 2009, while 17% picked global macro and 15% chose managed futures.

One in ten managers picked long/short equity funds as the best performer.

Distressed strategies had a tough time in 2008, falling 20%, according to Credit Suisse/Tremont, as the price of many securities continued to fall. Managed futures, which bet on trends in global futures markets, fared better however, as the top-performing strategy, gaining 18%, while dedicated short bias funds made 15%.

Shorting means betting on a lower price for a security in the future.

All other strategies lost money, although global macro strategies, which bet on the direction of prices in currencies, shares, bonds and commodities, lost a relatively modest 5%.

Meanwhile, the survey results indicate that the industry, which has traditionally charged high performance and management fees on both hedge funds and funds of funds, could be set for lower charges following its tough period of performance. Just over 30% of respondents to the survey said they expect funds to reduce or remove management fees as the best change to pricing in order to retain investors, while a further 15% expect funds to cut performance fees.

A further 17% see funds of hedge funds' management fees falling, while 7% see their performance fees declining.

Elsewhere, the prime brokerage industry looks set for a shake-upó16% of respondents said they expect universal banks or fund management companies to encroach on the territory of former broker dealers.

The survey was conducted in November and covered 33 single manager funds or funds of hedge funds.

Lipper is a Thomson Reuters company.

By Laurence Fletcher