Alternative asset managers are generally optimistic about the performance of their portfolios under the presidency of Donald Trump, according to a Preqin survey.
On 8 November, property magnate and reality TV star Trump has defied all expectations to become the 45th US president elect, immediately throwing global markets into turmoil.
Stefan Kreuzkamp, chief investment officer at Deutsche Asset Management, said that Trump’s victory “definitely caught markets by surprise”.
“We expect that market volatility should continue due to increased political uncertainty.”
However, the Preqin survey of 125 fund managers found their reaction to be generally positive, with 53 percent saying the result will mean positive things for alternative assets in the US, and only 12 percent saying the effects will be negative.
For non-US assets, however, the results were more varied, with 22 percent saying the effects will be positive, 25 percent saying they will be negative and 30 percent saying it will be neutral.
Of hedge fund managers surveyed, 53 percent said they expect their US-based assets to benefit from the election result before the end of 2016. Some 46 percent said they expect to see benefits over the next 12 months, and 35 percent said they expect positive effects in the longer term.
At the other end of the scale, 9 percent said they expect to see negative effects on their hedge fund performance both before the end of 2016, and within the next 12 months. In the longer term, 11 percent said they expect hedge fund performance to suffer.
Regarding Trump’s specific policies, 73 percent said they think a reduction in corporate tax would be beneficial for fund managers, while 62 percent said they feel positive about proposed spending on infrastructure.
Incentivised repatriation of corporate earnings held abroad was also considered to be a benefit to the industry by 57 percent.
However, 59 percent said that plans to renegotiate membership with, or withdraw from, the North American Free Trade Agreement, would be a negative for fund managers, and 54 percent were concerned about the effect of withdrawal from the trans-Pacific partnership.
Some 55 percent also said they believe changes to taxation of carried interest would be negative.
According to Preqin, managers generally suggested that uncertainty remains around the effects of Trump’s policy proposals.
However, the report said: “While some managers suggested that potential impacts on debt rates and securing investor capital might be negative, others felt that market volatility might serve to benefit alternative investments, and reduce recent correlation in returns between the industry and more conventional financial markets.”
It went on: “The result of these mainly pro-business policies has been that the majority of respondents believe their respective industries in the US—and the alternative assets industry more generally—will be positively affected by the Trump administration.”
The survey included respondents from the private equity, private real estate, infrastructure, private debt and natural resources sectors, plus 60 hedge fund managers.
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