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December 22, 2003 at 07:00 PM
NEW YORK (HedgeWorld.com)–Absolute-return strategies in foreign exchange markets and opportunities in Japanese equities are intriguing new trends for 2004, according to Virginia Parker of Parker Global Strategies.
She expects hedge fund assets to grow by around 20% in 2004, in large measure from investments by U.S.- and Japan-based institutions. Merger arbitrage is among the strategies likely to perform well, as are long/short equity and distressed securities, which did exceptionally well this year.
While the U.S. stock market could have a correction in 2004, it probably will continue to offer investment opportunities, as the economy appears to be strong, she argued. And for the first time in a decade, there are meaningful signs of recovery in Japan, such as bank loans being paid off.
“Many Japanese managers believe that 2003 might be the first year of a sustained bull market in Japan,” said Ms. Parker.
Currency Risk
Some managers achieved high returns in currency markets this year, she pointed out. The U.S dollar continues to decline against the euro, but from a fundamental perspective that trend should reverse, because the U.S. economy is growing faster than European economies.
