04/04/2005

US financial advisors favour long/short strategies, claims survey

Over a third of US financial advisors (36%) believe long/short equities will provide the best hedge fund returns over the next two years, according to a survey by JPMorgan. Survey respondents's next favoured hedge fund strategy was Global/macro, with 18.6%, and Relative Value was next at 7.1%.
The continuing popularity of hedge funds among individuals was reflected in the 72.9% of advisors with clients that had invested in a hedge fund of funds in the past year. This compared with 64.3% with clients investing in real estate, 44.3% in individual hedge funds and 25.7% in private equity.
Though independent financial advisors favoured hedge fund of funds as an alternative investment, they acknowledged a more conservative expectation for returns. Eighty-one percent of advisors surveyed expected 5-10% returns from a hedge fund of funds over the next 3-5 years, while only 40% expected 5-10% returns for individual hedge funds and 41% expected 10-15% returns for individual hedge funds.
The manager polled 125 advisors who make investment allocations for affluent clients, most with portfolios of $1m to US$10m, for their views on alternative investments.