Hedge Funds Cite 'Fiscal Cliff' as Top Concern: Survey

Date: Tuesday, October 23, 2012
Author: Matt Twomey, CNBC

The upcoming elections and the impending “fiscal cliff” have hedge funds more on edge than any other issue, according to a survey by Macro Risk Advisors.

More than 60 percent of responding hedge funds listed the possibility of big tax hikes and deep spending cuts as a top concern. As U.S. economic growth continues to disappoint, the survey suggests major investors are watching the shifting balance of power in Washington very closely.

The potential breakup of Europe’s monetary union came next in the survey, followed closely by the possibility of Israel attacking Iran.

This year's results marked a change from the past three years, when worries over European issues have dominated the investment landscape. This time, European risks ranked behind two others: a debt crisis or housing bubble burst in China, and central banks’ impact on currencies.

The survey showed hedge funds are also watching carefully whether global growth will come in over or under 3.5 percent this year. More than 30 percent chose the issue as a top concern.

MRA surveyed more than 50 hedge funds overseeing at least $1 billion, asking them which of 14 issues were most relevant to market conditions.