Good year for hedge funds forecast

Hedge funds have a bright future ahead of them in 2006, according to asset management experts.

Following strong performances from hedge funds in the first quarter, experts say that the trend is set to continue for the rest of the year, with increasing market volatility making the funds an increasingly more attractive option for investors.

With returns so far this year standing at an average of four per cent, forecasters predict that this will rise to give average returns of up to 15 per cent by the end of the year.

Speaking to Reuters, Dawn Kendall, investment director at GAIM Advisors, said that the expected volatility of the markets would help hedge funds succeed.

"It's going to be a good year… because of the fact that the environment is right for there to be ample opportunities for skill-based investors," she said.

The predictions come as big investors turn away from stock, in which they have invested heavily over recent years, to hedge funds.

They are attracted by the prospect of high returns, regardless of whether the markets are rising, falling or in a volatile state.

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