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The co-chief investment officer of the $41 billion investment manager Permal Group sees opportunities in banking sector consolidation.
2016 Investor Outlook : Cambridge Associates | Eagle's View Capital | Evanston Capital Management | Goldman Sachs Asset Management | Investcorp | J.P. Morgan Alternative Asset Management | Man FRM | Morgan Creek | Morgan Stanley AIP | Oppenheimer Asset Management | PAAMCO | The Permal Group | Pictet Alternative Advisors | Protege Partners | SkyBridge Capital | Wells Fargo Investment Institute | Witter Family Office
Which hedge fund strategies will do best in 2016? Why?
Using the HFRX Indices as the basis for strategy selection, I think the best performing strategy for 2016 is likely to be the HFRX MLP Index which, as of November 30, is down 30.6% and is the worst performing hedge fund strategy in 2015. These numbers (and of MLP's in general) have been driven by a number of factors including: 1) taint, as anything energy and oil related has declined with the price of oil; 2) fears of declining oil and gas volumes running through the pipelines; 3) fears of rising interest rates, which impacts both the cost of capital for expansion, as well as putting pressure on yield like equities; 4) fears of future dividend rate cuts as we saw with Kinder Morgan; and 5) tax loss and technical selling pressure, which put enormous pressure on MLPs going into year-end.
I believe that many of these fears are over exaggerated and should dissipate as 2016 unfolds. Let me address each 1) Oil prices should stabilize as demand continues to grow and supply stabilizes or even contracts. Annual car sales in the U.S. are running at 18 million units, levels that were last seen before the financial crisis. More importantly, over 60% of these sales...