Fund of hedge funds manager International Asset Management expects credit and long/short equity strategies to perform well and sees opportunities for macro-strategies due to movements in fixed income and currency markets.
Credit strategies are expected to do well due to valuation anomalies. IAM says high yields seem to offer a greater level of mispricing and that stressed securities are creating opportunities for long/short managers. The firm expects shorting to be more rewarding this year than in 2009.
IAM also has a positive outlook on macro-strategies. It says macro-managers have low exposure to equities and commodities but are taking long positions in commodities and are likely to increase equity exposure on the back of market corrections.
The firm says long/short equity managers should be able to add value through stock selection because equiy markets are being driven by fundamental factors rather than macroeconomic ones.