Democracy within the alternatives community
Hedge fund managers and service providers participate in a snap poll on investment opportunities and the outcome of the credit crunch.
Hedge fund managers and all the related hangers-on (like service providers and journalists) are lovers of freedom and liberty, but especially they love democracy.
At Hong Kong's GAIM conference, the audience was given proportional representation in a session hosted by AsianInvestor's Jame DiBiasio. Via electronic polling, the audience reacted to a number of questions about the credit crunch, investment opportunities and politics.
Scrutinising the results and adding their two cents worth was a panel of wise elders from the alternatives community: Kirby Daly, head of sales and capital introductions at Newedge Group; Ed Rogers of Rogers Investment Advisors; and Jonathan Field of the hedge fund administration wing of HSBC.
Acting on the notion of the wisdom of crowds, this experiment in democracy brought forth:
Best/most profitable growth for hedge funds in 2008
Greater China, 29.2%
Japan, 20.8%
India, 19.4%
Asean, 15.3%
Australia
15.3%
The panel says:
Daley: "I think Asia-ex-Japan is going to hit road bumps this year"
Rogers: "This selection represents the best of the worst"
Best performing Asia ex-Japan strategy this year?
Volatility. 56.9%
Equity long/short, 21.5%
CB arbitrage, 9.2%
Stat arbitrage, 3.1%
Activist, 6.2%
Merger arbitrage, 3.1%
Field: ôThere's a lot more volatility in addition to what's already come. However, as an administrator long/short is a gift.ö
Rogers: ôA lot of allocators come here looking for long/short, but this is going to be a great year for [volatility] hedge funds like Artradis.ö
DiBiasio: ôAs AsianInvestor wrote at the beginning of this year, æViva VolatilityÆ.ö
What will be the total size of global write-downs associated with the subprime crisis?
$250 billion, 4.4%
$500 billion, 35.3%
$ 750 billion, 25%
$1 trillion, 14.7%
More than $1 trillion, 20.6%
Field: ôA trillion û itÆs a load of money but weÆll get away with it."
Rogers: ôI go with a trillion too û this smells worse than the savings and loans crisis did.ô
Daley: ôStay away from financials for a very long time. WeÆre nowhere near finished.ö
How long will the crunch continue?
3 months, 4.1%
6 months, 13.5%
1 year, 50%
More than 2 years, 32.4%
Rogers: ôIt's not till we hit rock bottom that we figure out how long this will take to work out. When Warren Buffett decides to buy an investment bank with his $35 billion in cash, that will be a good sign.ö
Daley: ôI donÆt think housing will bottom out in the US till 2009, and that needs to happen before recovery. The FedÆs recent move to help broker/dealers was important. Someone told me it was an 'effing good trade' to swap subprime into Treasuries."
Best currency returns over in next 12 months?
US$, 13.7%
EUR, 16.4%
GBP, 0.0%
JPY, 15.1%
RMB, 49.3%
Other, 5.5%
Field: ôThe trend is going to continue with the RMB, and that will help the West.ö
Rogers: ôSooner the RMB floats the better. The world needs China's liquidity.ö
Which asset class will generate the best returns in the next 24 months?
Brics equities, 23.1%
US Reits, 4.6%
US financial stocks, 24.6%
Global credit, 18.5%
Global private-equity buyouts, 10.6%
Asia funds of hedge funds, 18.5%
Rogers: ôJapanese funds of funds would be my number one; in two years time there will be significant rebound in financials û but they may not bottom for another 12 monthsö
Daley: ôBrics equity benefited from the liquidity over several years, and that now has to be paid back.ö
Field: ôI voted for Asian credit. People we talk to canÆt wait to get stuck in.ö
Japan is going to become:
A vital integrated part of North Asia growth story, 27%
Switzerland û old, rich, stable, aloof, boring, 49.2%
Shorn of working age people, an economic satellite of China, 23.8%
Daley: ôThe only thing that can save Japan is if there is a sea change, and the reform element split from the existing political parties.ö
Rogers: ôItÆs a $5 trillion economy. To think it will become irrelevant is plain silly.ö
Will pollution drive hedge funds from Hong Kong?
Yes, 47.1%
No, 52.9%
The next president of the United States will be?
Hilary Clinton, 12.5%
Barack Obama, 54.7%
John McCain, 26.6%
Ron Paul, 3.1%
Al Gore, 3.1%
Rogers: ôI think so much damage will be done in the Democrats' camp that McCain ends up becoming president.ö
Field: ôObama. In the UK we get all this over within three weeks. Last year the UK changed its government and didn't even have an election. The other day, I phoned into a talk radio station to complain about how people were going on and on and on..."
At Hong Kong's GAIM conference, the audience was given proportional representation in a session hosted by AsianInvestor's Jame DiBiasio. Via electronic polling, the audience reacted to a number of questions about the credit crunch, investment opportunities and politics.
Scrutinising the results and adding their two cents worth was a panel of wise elders from the alternatives community: Kirby Daly, head of sales and capital introductions at Newedge Group; Ed Rogers of Rogers Investment Advisors; and Jonathan Field of the hedge fund administration wing of HSBC.
Acting on the notion of the wisdom of crowds, this experiment in democracy brought forth:
Best/most profitable growth for hedge funds in 2008
Greater China, 29.2%
Japan, 20.8%
India, 19.4%
Asean, 15.3%
Australia
15.3%
The panel says:
Daley: "I think Asia-ex-Japan is going to hit road bumps this year"
Rogers: "This selection represents the best of the worst"
Best performing Asia ex-Japan strategy this year?
Volatility. 56.9%
Equity long/short, 21.5%
CB arbitrage, 9.2%
Stat arbitrage, 3.1%
Activist, 6.2%
Merger arbitrage, 3.1%
Field: ôThere's a lot more volatility in addition to what's already come. However, as an administrator long/short is a gift.ö
Rogers: ôA lot of allocators come here looking for long/short, but this is going to be a great year for [volatility] hedge funds like Artradis.ö
DiBiasio: ôAs AsianInvestor wrote at the beginning of this year, æViva VolatilityÆ.ö
What will be the total size of global write-downs associated with the subprime crisis?
$250 billion, 4.4%
$500 billion, 35.3%
$ 750 billion, 25%
$1 trillion, 14.7%
More than $1 trillion, 20.6%
Field: ôA trillion û itÆs a load of money but weÆll get away with it."
Rogers: ôI go with a trillion too û this smells worse than the savings and loans crisis did.ô
Daley: ôStay away from financials for a very long time. WeÆre nowhere near finished.ö
How long will the crunch continue?
3 months, 4.1%
6 months, 13.5%
1 year, 50%
More than 2 years, 32.4%
Rogers: ôIt's not till we hit rock bottom that we figure out how long this will take to work out. When Warren Buffett decides to buy an investment bank with his $35 billion in cash, that will be a good sign.ö
Daley: ôI donÆt think housing will bottom out in the US till 2009, and that needs to happen before recovery. The FedÆs recent move to help broker/dealers was important. Someone told me it was an 'effing good trade' to swap subprime into Treasuries."
Best currency returns over in next 12 months?
US$, 13.7%
EUR, 16.4%
GBP, 0.0%
JPY, 15.1%
RMB, 49.3%
Other, 5.5%
Field: ôThe trend is going to continue with the RMB, and that will help the West.ö
Rogers: ôSooner the RMB floats the better. The world needs China's liquidity.ö
Which asset class will generate the best returns in the next 24 months?
Brics equities, 23.1%
US Reits, 4.6%
US financial stocks, 24.6%
Global credit, 18.5%
Global private-equity buyouts, 10.6%
Asia funds of hedge funds, 18.5%
Rogers: ôJapanese funds of funds would be my number one; in two years time there will be significant rebound in financials û but they may not bottom for another 12 monthsö
Daley: ôBrics equity benefited from the liquidity over several years, and that now has to be paid back.ö
Field: ôI voted for Asian credit. People we talk to canÆt wait to get stuck in.ö
Japan is going to become:
A vital integrated part of North Asia growth story, 27%
Switzerland û old, rich, stable, aloof, boring, 49.2%
Shorn of working age people, an economic satellite of China, 23.8%
Daley: ôThe only thing that can save Japan is if there is a sea change, and the reform element split from the existing political parties.ö
Rogers: ôItÆs a $5 trillion economy. To think it will become irrelevant is plain silly.ö
Will pollution drive hedge funds from Hong Kong?
Yes, 47.1%
No, 52.9%
The next president of the United States will be?
Hilary Clinton, 12.5%
Barack Obama, 54.7%
John McCain, 26.6%
Ron Paul, 3.1%
Al Gore, 3.1%
Rogers: ôI think so much damage will be done in the Democrats' camp that McCain ends up becoming president.ö
Field: ôObama. In the UK we get all this over within three weeks. Last year the UK changed its government and didn't even have an election. The other day, I phoned into a talk radio station to complain about how people were going on and on and on..."
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