October 29, 2006

What’s Hot, What’s Not!

-- By Pushpa Sathish, Staff Writer

Executives in the hedge fund industry are forecasting a good performance year ahead for those funds that deal in merger and acquisition arbitrage. These funds take advantage of impending mergers to trade stocks of the concerned companies, either before the news is made public or after the announcement is made.

Another category that is expected to do well is the global macro fund that speculates on bond, equity and currency markets, and on long/short funds equity funds. The best performers so far are the convertible arbitrage funds that trade in the components of convertible bonds that can be converted into a company’s stock.

Convertible arbitrage funds
returned 10.68 percent this September, while event-driven (merger and arbitrage) funds returned 9.16 percent, according to monthly statistics from the Credit Suisse/Tremont index.

So what’s been performing below par? The managed futures funds which bet on market trends by using computer models – they declined by 0.13 percent since the beginning of this year, said Credit Suisse/Tremont.

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