Hedge Fund Reader : Japanese economy lures Funds of hedge funds

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September 10, 2005

Japanese economy lures Funds of hedge funds

The Funds of hedge funds now see hope building up in Japan with a solid growth forecast for the country. The Reuters survey of 12 funds of hedge funds have bet on a strong forecast of above average returns for its investments in Japanese stocks, due to improving economic growth and the prospect of reforms for over next two quarters. Hedge funds invest in a range of different class of assets and funds of funds spread their money between hedge fund strategies to further minimize risk. The survey pointed out that globally these funds put in around 38 per cent of their money in the next three months to make average positive returns from the long/short strategy, which tries to pick stocks that are going to do better or worse than the overall market. And in Japan, around seven of such funds of funds in the Reuters poll picked long/short as a strategy for the next three to six months. Reportedly, around nine percent of the money will be allocated by these funds towards the long/short strategy to be implemented in Japan for the rest of this year. Experts believe that a victory for Japan's Prime Minister Mr. Junichiro Koizumi in September 11 lower house elections would give him a stronger mandate for reforms making Japanese assets a lucrative investment. Reuters Reports:

"Global macro will continue to experience rich opportunities as a result of the revaluation of the Chinese currency, uncertainties about rising commodity prices, and weather-related issues just to name a few," said Anthony Gibson at Coronation Fund Managers. Current themes include the path of oil prices and the fate of U.S. interest rates, given the impact of last month's Hurricane Katrina on the U.S. economy.