Hedge funds predict global macro to beat rivals in choppy 2012

The world’s largest hedge funds expect the global macro strategy to do best in their industry next year, as macro rather than fundamental factors continue to drive volatile but range-bound markets.

They say the Dax will end 2012 at around 5778 points, roughly its present level, though equities will be volatile.

US shares as represented by the S&P 500 index will end next year at 1244 points, the MSCI Emerging Markets benchmark will be at about 951 points; the 10-year US Treasury will yield about 2.38%; and gold will cost $1,741 per troy ounce.

Some 57% feel macro factors will be the main drivers of performance in 2012, although this masks a divergence between strategies, Two thirds of long/short equity managers say fundamental factors will drive markets, while 90% of tactical traders believe macro factors will rule.

The 125 managers polled in October by US hedge fund research firm Aksia, are overwhelmingly in favour (94%) of more monetary easing in Europe.

Answers as to what US policymakers should do showed a similar but less pronounced trend than for Europe.

The main eurozone authority – the European Central Bank – has so far been slow to move, saying activities such as printing money fall outside its remit, and are not wanted by the bloc’s largest economy, Berlin.

Although almost all managers want more supportive measures enacted, 42% still expect both Italy and Spain to default on, or restructure, debt.

Some 60% expect Greece to exit the euro, and 65% predict eurozone member states will issue Eurobonds – another move so far thwarted by Berlin.

But 83% say it is unlikely northern European states will create their own state within the eurozone.

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