LONDON (Reuters) - Opportunities abound for equity and credit-focused hedge funds, according to Axa Investment Managers, but the firm is favouring nimble players able to adjust strategies quickly in still uncertain markets.
Chris Manser, global head of funds of hedge funds at Axa IM, part of insurance giant Axa,said he likes managers who can switch quickly between a net long position -- where stocks owned outweigh those it is shorting in anticipation of a fall -- and a net short position.
He is shunning managers who closely adhere to a net long or net short position and who would perform better during a long term rally or bear market.
Manser is also taking care to find hedge fund managers who are holding assets they could sell more easily in the event of a fresh market fall or a return to tight liquidity.
“We’re still focusing the bulk of our attention on more liquid opportunities in the equity space and credit. We favour the more opportunistic guys, less so managers with a particular bias,” he told Reuters.
“There is a good chance the equity market will continue to trade with a rising bias but there’s enough uncertainty generally in markets that we want to stay flexible. There’s a diversity of opinions, ranging between deflation and inflation, a ‘V’ and ‘W’-shaped (economic) recovery.”
Stock markets have rallied strongly this year as investors bet the global economic downturn would not be as bad as originally feared.
Britain’s blue chip FTSE 100 is up nearly 50 percent from its March lows, although an increasing number of investors believe markets are due for a pullback given that economic activity is still subdued.
Manser also said he favours global macro hedge funds -- opportunistic managers who take bets on a wide variety of liquid assets around the world.
Editing by Greg Mahlich