Hedge fund managers, small ones at least, say the U.S. economy should have a flat to upbeat year in 2006, according to a survey released in March.
VanthedgePoint, a technology-services firm based in New York that caters to hedge funds with less than $100 million in assets, surveyed 100 managers. Just under half (44 percent) said they are slightly bullish on the U.S. economy this year. Another third (32 percent) said they are neutral. Managers said two major factors shaping economic performance this year are “increased energy costs” (39 percent) and a “real estate market slowdown” (32 percent).
According to 37 percent of respondents, international equities will notch the highest returns of any asset class in 2006. Another 30 percent of managers surveyed said instead that commodities would take the lead spot, while 27 percent said U.S. equities would win the race. The worst performers are expected to be real estate (49 percent) and U.S. government debt (22 percent). As far as sectors go, managers said this year would favor technology and raw materials (37 percent each), followed by financial services and Internet (both 27 percent) and defense (24 percent).
The survey also found that 22 percent of small hedge fund managers invest more than 20 percent of their portfolio in private equity.