NEW YORK, Dec 5 (Reuters) - Hedge fund manager Boaz Weinstein is bullish on Italian sovereign debt. Ameriprise Financial chief market strategist David Joy is optimistic about the prospects of the United States avoiding a recession in 2012.
Meanwhile, Jane Buchan, chief executive officer of a firm that specializes in investing in hedge funds, sees tough times ahead for the $2 trillion industry, as fund managers face more competition for pension fund money from traditional asset management firms.
And money manager Ken Fisher, in maybe the most surprising comment of all, is not high on Abraham Lincoln, the U.S. president who fought the Civil War to end slavery.
Those are some of the highlights coming from the first day of the Reuters 2012 Investment Outlook Summit. A diverse group of money managers and investment advisers are sharing thoughts on topics ranging from the debt crisis in Europe to income stagnation in the United States to ideas on where to invest in the coming year.
Here are some the highlights from the first round of guests appearing at the Reuters summit in New York.
Kenneth Fisher, CEO of Fisher Investments
Fisher, a long-time Forbes columnist and author of several books on the markets, is particularly bullish, saying he does not expect either Europe or the United States to slip into recession in 2012. Fisher said he prefers European leaders do nothing to deal with the sovereign debt crisis in Italy and Spain because he fears anything they agree to would only make things worse.
A longtime critic of government intervention in the economy, Fisher said markets are the best solution for dealing with a financial crisis.
Fisher, whose Woodside, California-based money management firm oversees $40 billion in assets, said entrepreneurs have contributed more to society than any U.S. politician.
When pressed on the point, Fisher said he ranks Lincoln, widely regarded by many as the greatest U.S. president, as one of the worst American leaders because he chose war over first negotiating with the slave-holding southern states. “He was killing to kill American” for an idea, said Fisher.
Boaz Weinstein, founder of Saba Capital Management
Weinstein, whose credit-focused $4.9 billion hedge fund is up about 9 percent this year, said he recently bought Italian sovereign debt. The former Deutsche Bank trader said he bought the Italian bonds when the yield crossed 7 percent because he thinks the risk of default is not as great as the market believes.
Weinstein said when the markets are betting that Italy is more likely to default on its debt than an Italian bank, there is “mispricing” in the market. “I don’t see any reasonable chance were Italy would default and the banks wouldn’t,” he said.
In time, he expects the yield on Italian sovereign debt to decline and sees a limited chance of Italy defaulting on those obligations.
Jane Buchan, CEO of Pacific Alternative Asset Management
Buchan, whose Irvine, California-based fund specializes in investing in hedge funds for pension fund clients, said the age of the superstar hedge fund manager could be coming to an end. Large pension funds are increasingly looking to put their money with traditional asset management firms that offer “hedge-like” investments products that can go both long and short on stocks and bonds, she said.
“The person who is getting crunched in this scenario is the hedge fund manager,” especially when traditional asset managers can offer lower costs alternatives, said Buchan.
David Joy, chief market strategist for Ameriprise Financial
Joy said he is bullish on the United States and thinks the recession fears of this past summer were overblown. He expects the U.S. economy to grow, but at a modest pace in the coming year, adding that he has been surprised at the recent revival in consumer spending.
“What actually happened was people realized the world didn’t stop turning, so people started spending again,” he said. “I think the U.S. market is well positioned.”
Joy said he expects the best returns, however, to come from investments in emerging market nations like China.