Hedge Fund Optimism Increases

July 13, 2021 James Heinsman Hedge Fund News

Hedge Funds are demonstrating some newfound optimism as double-digit returns and increasing assets under management point to excellent business prospects. 

Last week, hedge funds rated their economic confidence at +19.5, up from an average +18.4 from last quarter. The scale ranges from -50 to +50. A survey in the second quarter Hedge Fund Confidence Index from AIMA, Simmons & Simmons, and Seward & Kissel asked 300 hedge funds to consider the following points when assessing their outlook: 

  1. The firm’s ability to raise capital
  2. The firm’s ability to generate revenue and mitigate costs 
  3. Overall fund performance 

Remote work is also a factor. Many offices are back to operating, but most meetings are still held virtually. According to the HFR index, “There is a greater level of confidence in the virtual outreach with examples of new businesses being successfully onboarded.”

Hedge funds in equity are still the best-performing strategy, but global macro strategies are also doing especially well. The report states: “The accompanying volatility in equity and commodity prices is typically a good environment for macro funds to outperform. Increasingly investors are looking to the qualities that hedge funds demonstrate in being able to manage any downside risk from market volatility as well as the heterogeneity of their investment strategies which can provide the best potential for significant diversification as well as the highest potential for generating out-performance.”

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