A Greek exit from the euro region probably won’t tempt hedge funds waiting on the sidelines to restart trading around the crisis.
“Following any Grexit event, we would wait for more clarity on any European/European Central Bank policy response,” Chris Huggins, a money manager with Man Group’s GLG hedge fund unit, said in a telephone interview from London on Wednesday.
Uncertainty surrounding the Greek crisis has put off hedge funds such as Balyasny Asset Management, which terminated all direct exposure to the country three weeks ago. Just 11 of the 80 hedge funds on Lyxor Asset Management’s platform held direct exposure to Greek securities last week, the Paris-based investor said.
“Hedge funds have been in risk reduction mode over Greece,” said Huggins, who manages Man Group’s $275 million GLG Cross Asset Value Offshore Fund. A spokeswoman for Man Group, which manages a total of $78.1 billion, declined to comment on specific positions taken by the company on Greece.
Europe has “a Grexit scenario prepared in detail,” European Commission President Jean-Claude Juncker said on Tuesday, in a sign Greece is closer to leaving the euro area. Prime Minister Alexis Tsipras has until midnight Thursday to present his European colleagues with a plan that includes spending cuts, in exchange for a new European bailout.
“The price action of the last couple of weeks is likely to have strengthened the conviction among European leaders that markets can handle a Grexit,” said Huggins. He views the odds of Greece leaving the euro as 60/40. “A Grexit would almost certainly be initially negative for risk assets,” he said.
Huggins’s fund returned 2.9 percent in the year through May, beating 61 percent of peers, and rose 4.7 percent in 2014, according to data compiled by Bloomberg. It started in December 2012.