Asia Private Banks favour event-driven hedge funds

SINGAPORE/HONG KONG, May 25 (Reuters) – Private banks are recommending that clients allocate more money to hedge funds, in particular event-driven funds that will benefit from an expected surge in mergers and acquisitions and debt restructuring.

Unlike in 2009 when stocks rallied across the board, the overall market direction is less certain this year and the best returns will likely come from event-driven managers who can better navigate the twists and turns in M&As compared with traditional long-only and exchange-traded funds (ETFs).

In debt markets, corporate and emerging market spreads have narrowed significantly, and outsized gains will come from sorting out the over $400 billion in leveraged loans from the buyout bubble that will mature in the next few years, private bank investment strategists polled by Reuters said.

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