Why Hedge Fund Hite Is Betting Against Fossil Fuels
Hedge funds bet on recovery in 2021
Hedge funds that use leverage and employ more aggressive, often riskier strategies than other investors believe many previously unwanted sectors, from energy to retail, will rebound in 2021.
With approximately $ 3 trillion in assets, hedge funds have demonstrated resilience in 2020, with many outperforming the market according to investors.
«We think 2021 will be a really positive year for the markets», – said Jason Donville (Jason Donville), President and CEO of Donville Kent Asset Management in Toronto. He predicts a sharp spike in deferred travel and leisure demand, leading to a period «super-growth».
«I think it will take some time for vaccines to start introducing, and then around March, April, May we will get the effect of vaccines that reach a certain critical mass … and a decrease in the rate of infection».
In general, for 2020 index S&The P 500 unofficially rallied 16.26%, a stunning rally amid the bear market that started when the pandemic spread rapidly earlier in the year.
«I’d say 2021 will be the year of recovery», – said Robert Sears (Robert Sears), Chief Investment Officer of UK-based Capital Generation Partners, which invests in hedge funds around the world. «This is a unanimous opinion».
IT sector S leads growth in 2020&The P 500, which is up over 42% as the sector has benefited from a sharp acceleration in online trends. On the other hand, the index S&The P 500 Hotels, Restaurants and Leisure increased 1.4%. However, in the past quarter, stocks in entertainment, leisure and recreation companies rebounded as vaccine introduction raised hopes of recovery..
«I think the macroeconomic environment will remain quite volatile, so the macroeconomy should have a good year», – Sears said, referring to funds investing in line with macroeconomic trends.
He added that funds specializing in currencies and commodities should do well..
Jack McIntyre (Jack McIntyre), portfolio manager for $ 62 billion US firm Brandywine Global, which implements a macro hedge fund strategy, said there will be «less uncertainty and more confidence».
The financial sector is a sector that is facing the coronavirus problem and may receive support from the recovery, said Philip Ferreira (Philippe Ferreira) of Paris-based hedge fund Lyxor Asset Management, adding that the sector generally performs better in the early recovery phase.
«Managers reduce short-term financial bias as we enter a recovery phase», – said Ferreira, whose company invests in hedge funds around the world.
Financial Index S&P fell by about 4.3% in 2020 despite recovery in the fourth quarter.
«In terms of macroeconomics, managers say that at such low rates, they are diversifying fixed income with inflation, especially with regard to the US and gold.», – said Ferreira.
North American energy is another affected sector popular with hedge funds, according to market participants. Canada’s Energy Sector Index lost 37.8% for all of 2020, while the comparable US index fell 37.3%.
«Anything from the energy field … it’s all about COVID recovery as fuel demand grows and people return to the office more often», – said one of the Canadian hedge fund managers.
AltaGas shares fell 60% in March and were down 5.1% in the year to December 31. Pembina & Canadian Natural Gas Shares Down 61.3% And 27.3% Respectively In 2020.
«I would say that energy consumption will be a very healthy recovery and is likely to remain above the historical level on an annualized basis.», – said Jay Tatum (Jay Tatum), portfolio manager at New York steel company Valent Asset Management. He added that oil is one of the energy sources that will grow.