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Morgan Creek Capital CEO Mark Yusko on why investors should consider small-cap stocks in China and technology stocks in India.
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-- time four point one billion dollars in new capital going -- to hedge funds in the second quarter but hedge fund research -- says that its index shows.
The -- actually down about two point 7% in the second quarter so.
Our hedge funds still considered the Smart money Robert -- -- -- the New York Stock Exchange with a tough standard of Fox Business exclusive.
Go ahead -- yeah that's right Davis argues -- is the founder CEO of Morgan Creek capital and mark thanks so much for joining us here were just talking about.
As a whole how the -- -- and industry trailing the S&P 500.
Obviously have a vested exist but are investors just as off by the mega caps and and by the S&P.
DC die you -- -- get bigger returns than just buying the spider.
Yeah you know we've been looking all over the world for value today in fact I was just in London a couple weeks ago talking -- managers about Europe.
For the first time in and maybe two years some of these managers are getting excited about things to buy in Europe -- heard a long time.
Now we've always been big -- on Asia particularly China and India and I continue to like those markets but in the short term it clearly has been a market that favors -- big gaps in the US.
And it really -- about the world of where -- -- he has basically you pick your worry of the day you talk to investors earlier today and everything up from the fiscal cleft.
To Europe to a slowdown in China out there right now.
Yet you still like some of the emerging markets for return where would you see the best returns out there for investors right now.
Yep so we had this luncheon today and and I talked about the three big risks that face assault one is that the European sovereign crisis.
Second is the fiscal cliff in the United States and third is that hard landing in China.
And the European sovereign crisis is real mean it's it's a big problem and I don't think it's going to solved any time soon so we worry a little bit about.
How you play that -- may be long short is the best way in those markets.
When you look at at the US in the slowing in the first quarter next year it's gonna happen spending cuts sequestration.
So we think it's gonna be a tough market in the USC look outside to about China's heartland.
Well there's an argument that says that maybe they're not slowing as much maybe it's the little sandbagging.
As they get ready for the turn over.
I like they -- the last new government and maybe they'll start stimulating next year and prompter out so we like we like China projected to small caps in the local consumer companies.
We like India -- quickly in terms of technology and some things they're doing in terms of services like Reliance Industries things like that Tata Motors.
-- the competes very well globally.
You're talking about long short funny just started when now obviously big returns but big risk can we seen a lot of short squeezes as we keep guessing -- the markets clearing this what this wall of worry here.
What industries have you guys been it would -- a bank in -- cash on in terms of shorting.
Yep so we actually started a global long short equity fund -- -- funds dot com and and what happens there if we take the best in class managers and hedge fund space long short managers to focus on a global basis.
Going long the best company short the worst companies.
And they actually have a lower volatility or lower risk then a lot of gyrations in the markets so if you look over the seven years you're running the fund.
It's actually got the same return is global equities but half the volatility in risk.
There -- a number of big hedge funds this year up double digits -- made as much money on the short side -- long side now the inexperienced guys are clearly get short squeeze by the algorithms and and all that but some of their looks -- guys are doing well.
We talk about -- return in risk.
-- a lot of people going out on the yield curve -- -- experience coming Iran the endowments about the university North Carolina and Notre -- -- our universities in pensions gonna make the 8% target when it in this in current environment.
Now it's amazing I -- investor couple months ago he's poured money to fixed income and said why said well we need to make seven a half percent our -- are some great -- gonna make too.
Bond's yield to.
You should know last ten years -- a seven and a half percent right because ten years ago the -- seven and half so cash pay zero bonds pay to.
Inequities maybe get five or six -- the zero to six conundrum.
How to get a legacy 200% equities -- 100% bonds -- lever.
-- are gonna do that foundations are can do that pensions are gonna do that evidently you've got to go to private equity capture the liquidity premium you gotta go to real real estate it to be distressed real estate things in Europe in the US that are being sold by the banks.
A lot of energy natural resources I think one of people on the show here a little bit earlier talk about commodities.
When he commodities for the long terms a fantastic place as a store of value.
And then the final thing -- private -- you know the banks won't lend to companies you can invest with private lenders that can make high double digit returns.
-- -- -- Is -- founder and CEO Morgan Creek capital guys and get back due to studio -- Robert and it just asking what the entrance fee is for that the -- actually about long short yes along short finally don't know what the the interest BS here.
Men get as little as 50000 dollars and that's for credit investors from.
And that's a registered investment company and all the details like senator Morgan Creek funds dot com.
A 5050 grand is your entrance fee there I know that that's what some people were thinking I want and what -- how much.
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