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All Change: Hedge Funds Favour Fixed Income over Equities


Date: Monday, December 10, 2012
Author: Nigel Someck, ProHedge.co.uk

A seismic shift is occurring in the hedge fund industry. For the first time ever, assets in fixed income are set to overtake equities.  The reason is down to performance. In a year where the S&P 500 returned 15% plus dividends, the average equity hedge fund only returned 5.8%.

Speaking to the FT this week Ken Heinz of HFR predicted: “It is highly likely that by the end of the year equities will no longer be the largest strategy.”

Whilst risks exist in the fixed income space, with “safe” bonds offering very low yields, it is still predicted that this asset class will be favoured. Added to that, multi-strategy is set to see a resurgence as institutional investors look for diversity and a hedge from equities.

Heading into 2013 it is all change in the $2tn industry as fund managers review their operating and investment models to thrive in the current climate.