Mandates Rise with Investor Confidence
Global investor confidence has risen steadily for the past seven months after the worst period of the financial crisis. State Street Global Markets’ Investor Confidence Index rose 3.6 points in July to 119.4 from 115.8 in June. This is a high from the index’s overall low of 82.1 points in October of 2008. BHA measures investor interest in alternative investments through investor mandates. On average, BHA generates about 100 to 120 mandates per week. BHA has experienced a 10 percent increase in year-over-year growth in the number of mandates generated during the summer months, from the first week of June through the second week of August.
This abnormal increase in investor activity likely stems from the market’s turnaround. Traditionally, the summer months are slow as key decision makers take their vacations and due diligence is put on hold until the last week of August or first weeks of September.
However, this extraordinary year has seen investment teams searching for the best opportunities throughout the summer. Investors are trying to leverage unique market opportunities to make up for the abysmal losses of 2008 and early 2009 when the S&P 500 was off as much as 50 percent from its peak.
As of this writing, the NASDAQ-100 has erased half of the losses it incurred during the bear market and reached 1,637 for the first time since last fall. Similarly, the HFRI Equity Hedge (Total) Index is up 15.94 percent for the year and the HFRI Fund of Funds Composite Index is up 6.16 percent for the year.
Investors are taking advantage of the market’s rising tide to find the proper investments and they are taking advantage of BHA to better source managers for their investment needs.