SEB, the Northern European financial group, comments on Hedge Funds in the attached article “Less impact from politics = better potential”.
- SEB will continue to focus on managers who are free to quickly rotate their portfolios and have less structural exposure and focus on markets. We are avoiding less liquid strategies although we realise there is good potential in Distressed and Structured Credit.
- Equity Long/Short: We predict that the market will continue to be driven by political developments rather than company fundamentals. The best potential in the Equity Long/Short category is thus fleet-footed strategies like Trading and Variable Net Exposure, where exposures can quickly be adapted to swings in market sentiment.
- Relative Value: Management styles focused on short-term yields will probably continue to have a difficult time ahead, so we prefer strategies focused on the medium to long end of the yield curve.
- Event Driven: Companies are finding it increasingly hard to get bank loans, leading them to focus on restructuring their balance sheets. Event Driven managers with exceptionally good expertise in credits and equities thus have the best potential.
