American investors may soon earn more of their retirement savings in faraway places as nearly half of all U.S. fund managers predict new geographic markets will be their biggest sources of income, a new survey shows.
According to the study by the TABB Group released on Wednesday, fund managers also said they will put significantly more money into strategies that use both leverage and short sales, techniques long used by hedge funds.
Assets under management in traditional, actively managed mutual funds will remain relatively flat but so-called 120/20 or 130/30 funds will see assets balloon to nearly $2 trillion in 2010 from about $140 billion now, the survey found.
Such funds typically use borrowed money to magnify their long positions to 130 percent or 120 percent of their portfolio. They short 30 percent or 20 percent of their holdings, giving them a net exposure of 100 percent.
These types of funds were traditionally available only to institutional investors, but recently managers including Goldman Sachs and Merrill Lynch have made them available to retail investors.
Money managers are becoming more creative, moving overseas and towards frontier markets, moving up and down the capital structure, moving toward shorter-term, event-driven strategies and longer-term holding strategies that resemble private-equity type investments, TABB Group Chief Executive Larry Tabb said.
To find new investment opportunities, more than half of the polled portfolio managers also said they planned to spend more on independent research.
The Tabb group said it interviewed 67 portfolio managers, chief investment officer, heads of research and senior managers of hedge funds, funds of funds and traditional long-only asset managers. The group manages total assets of $12.3 trillion.