Hedge Funds Barely Register on New Survey

BOSTON (HedgeWorld.com)--Hedge funds barely registered on the radar screen of investors queried in Eaton Vance Corp.'s annual survey, but fund managers shouldn't feel too bad. The industry's "Q Rating" was on par with a couple of guys on whom enough ink has been spilled this past year to print a small-town newspaper: New York State Attorney General Eliot Spitzer and Securities and Exchange Commission Chairman William Donaldson.

In the nationwide survey of 1,000 investors, 60% of respondents said they were unaware of any recent SEC reforms. Of the 40% who were aware of some, however, 27% said they knew of the SEC's move to regulate hedge funds. Thirty-seven percent said they recalled a proposed SEC rule to implement a hard market close at 4 p.m. ET to deal with late trading of mutual fund shares.

Nonetheless, nearly 75% of investors said they had a "favorable opinion" of mutual fund companies.

Federal Reserve Chairman Alan Greenspan has much better numbers than his boss a few blocks away--90% of investors said they held a favorable view of him. Even the SEC got relatively high marks, with 67% of investors saying they had a positive view of the regulator. Then again, 60% of these same investors also held a favorable view of Congress.

Apparently investors were able to separate the SEC's existence from Mr. Donaldson's. Thirty-six percent of investors checked "don't know" when asked their view of the Commission chairman. And lest he think he's losing some kind of popularity contest to Mr. Spitzer, Mr. Donaldson can rest easy on that front. A full 39% of investors had no opinion of the hard-charging attorney general, who is generally credited with uncovering the mutual fund trading scandals and who recently announced he would run for governor of New York.

Other tid-bits from the survey include:

  • 19% of investors who voted for George W. Bush said high-income taxes were their top concern, while only 3% of investors who voted for John Kerry said so.
  • 79% of investors who voted for Mr. Bush said his tax cuts helped the economy, while 48% of those who voted for Mr. Kerry said the tax cuts hurt the economy. Fifty-one percent of Mr. Bush's backers, and 45% of Mr. Kerry's supporters agreed that future tax hikes would hurt the economy.
  • Nearly two-thirds of investors said the outcome of the presidential election would not cause them to reallocate their investments.
  • Only 43% of all investors said they reallocated their investments in 2004, however the percentage of those with more than US$250,000 in investments who said they reallocated this year (50%) was higher than those with less than US$250,000 (36%).
  • More than half--55%--of those surveyed said they believe they will need more than US$1 million in assets in order to retire.

CClair@HedgeWorld.com

Contact Bob Keane with questions or comments at bkeane@investmentadvisor.com.
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