Equity long/short managers see potential in 2012 but remain cautious while market volatility continues

Hedge fund managers running equity long/short strategies are cautiously optimistic about attaining good performance this year. European managers are increasing net exposures but see tail risks looming.

Equity long/short strategies are tipped to be one of the top performers this year. The strategy gained 4.43% in the first two months of 2012, according to BarclayHedge. This compares favourably with the negative 4.58% at the end of 2011.

Although there is little or no growth in many European economies, with fears of a serious slowdown still at the top of minds, Michael Browne, co-manager of Martin Currie’s European equity long short fund (pictured, right), believes any recession in Europe will be