For the second consecutive year, leading hedge fund advisory firm Parker Global Strategies is forecasting 20%-plus growth in global allocations to hedge funds in 2002, with arbitrage strategies expected to net the biggest inflows of assets.
“Hedge funds will continue to be the bright spot in the asset managementindustry, attracting more investors, new managers and more innovation than any other area of financial services,” said Virginia Parker, Founder and President of Parker Global Strategies.
“A desire for alternative investments with positive returns, demand for risk management, and increasing institutional comfort with hedge fund investments should lead to continued growth for the hedge fund industry in 2002,” said Ms. Parker.
Hedge funds outperformed traditional markets in 2001. Through October 2001, the HFR hedge fund index was up 0.85%, while the S&P 500 index was down 19.73%. According to various industry reports, assets at year-end 2000 were estimated to be $400 billion plus. Global Fund Analysis currently estimates assets to be $500 billion. This 20%+ growth is in line with what Ms. Parker forecasted annual growth to be over the next several years.
“Steep yield curves and historically low global interest rates should lead to extremely favorable returns for convertible arbitrage, fixed-income arbitrage and yield-curve arbitrage strategies in 2002, therefore attracting a large inflow of assets,” Ms. Parker added.