Investment trends: Investors look east and south
The Middle East and north Africa will be the top-performing regions in 2008, according to a survey of 1,000 investors by Deutsche Bank.
Investors said they would be redistributing capital away from mostly US and western European strategies to predominantly the Middle East and north Africa, Asia, Japan and Latin America. The best-performing strategies predicted by investors for 2008 are those focused on the Middle East/north Africa, Latin America and Russia. About 45% of those surveyed cited north American and western European strategies as being expected to produce the worst results. In the previous two surveys, Asian-focused funds were expected to be the top performers. "[These predictions] indicate a clear redistribution of capital towards emerging markets," says Sean Capstick, London-based co-head of the hedge fund capital group at Deutsche Bank.
It is unsurprising that macro, distressed and equity volatility are predicted to be the top performing strategies this year, and ABS and merger arbitrage the worst. Interestingly, the investors surveyed tend to be quite correct with their predictions. In Deutsche’s 2007 poll of investors, respondents predicted long/short equity, macro, event driven and distressed to be the best performers of the year. According to HFR’s strategy indices, the top performers were equity quant funds, macro, and long/short equity. Their prediction that Asia-focused strategies would outperform regionally was also correct.