NAPLES, Fla. (HedgeWorld.com)– Long time hedge fund investor and LJH Global Investments President James Hedges has a prescription for the turbulent times of 2003. He is focusing heavily on fixed-income arbitrage, where he sees broad opportunity, and equity market neutral, where managers can take advantage of market volatility.
The many opportunities that make fixed-income promising in this environment become clear when you look at various sub-strategies within the field, such as mortgage-backed arbitrage, global yield curve arbitrage, credit arbitrage, as well as possibly distressed high yield bonds and convertible arbitrage, he argued, speaking at a teleconference.
“We expect that volatility in the fixed-income sector is going to continue in 2003,” Mr. Hedges said, pointing out that interest rates are at a historic low in the United States, the yield curve is extremely steep and Federal deficits mean there will be a lot of Treasury issuance.
He cautioned, “Although this volatility should create great trading opportunities, it also creates a fairly risky environment.” Still, managers will be able to finance their positions at very attractive levels due to low interest rates, he said. He does not expect rates to increase this year.
At the Other End