HF Bosses Tip Global Macro, Mkt Neutral

Top hedge fund executives said that Global macro and market neutral strategies appear to be the top performers over the next 12 to 18 months, Reuters reports.

Speakers at the Global Alternative Investment Management meeting in Monaco said current volatile market conditions and the prospect of the credit crisis continuing or getting worse made market neutral funds, which aim to make money in both rising and falling markets, and macro funds attractive.

"With high levels of volatility they (market neutral) should be able to get good returns for less leverage. If you're concerned about the level of markets and the continuation of this credit crisis, equity market neutral may be a good strategy," said Peter Rigg, global head of the alternative investment bank at HSBC Private Bank (Suisse).

"I think it's the market neutral point that is critical in this environment," said Peter Clarke, chief executive of Man Group, who also said he favors global macro funds over the next 12-18 months.

The comments come after some hedge funds have struggled since the onset of the credit crisis last summer due to higher market volatility and a need to cut back leverage  quickly as prime brokers tighten credit lines.

Global macros funds, which returned 17.36% in 2007 and 5.19% in the first four months of 2008 and which bet on the likes of global equity markets, world currencies, sovereign debt and commodities, are favored as they tend to benefit from periods of increased volatility.

"I do like global macro....What I think is the driving theme of profit is that you have to have the ability to deploy your capital flexibly and very quickly within a changing market environment, and I think that's why macro has done very well," Randall Dillard, chief investment officer at Liongate.