High hopes for hedge funds
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Doug Krizner: Soon, you’ll get your retirement account statements for the fourth quarter. They may help illustrate what a tough year 2007 was for many mutual funds.
Hedge funds though were a different story. Hedge Fund Research says the average fund returned more than 10 percent last year and as Ashley Milne-Tyte reports, some are pretty bullish on hedge funds this year.
Ashley Milne-Tyte: Institutional investors are expected to park more money in hedge funds this year.
Ferenc Sanderson is an analyst with securities research firm Lipper. He says hedge fund managers could employ a number of winning strategies, including investing in companies in financial trouble:
Ferenc Sanderson: The trick amongst hedge fund managers and the skill is picking the right company or picking the right sector and obviously then holding that in the majority of cases until the market picks up.
Others will make money by successfully betting that a company will default. Chris Cutler of Manager Analysis Services says some of 2007’s most successful hedge funds scored using just that tactic:
Chris Cutler: The subprime wave was a tremendous macroeconomic distressed bet and a few names have been in the paper about how successful they were.
Such as hedge fund Paulson and Company, which former Fed chief Alan Greenspan has just joined as an advisor.
I’m Ashley Milne-Tyte for Marketplace.
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