Trends Watch: October 12, 2017

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks to Kevin Parks, Chief Investment Officer, Parks Capital Management.

What is your outlook for hedge funds?

It has been difficult for the hedge fund industry to outperform with so much capital chasing so few new ideas. I manage a small, sector-focused fund and since my universe is so limited, few of my holdings are widely followed and/or widely owned by institutional investors. Capacity-constrained strategies should benefit particularly if outflows accelerate at larger managers or ETFs.

What is your outlook for the economy?

As an investor in community banks, I focus on a more micro view of the domestic economy. Odds are, the next recession or slowdown won’t look like the last one, but the banking sector will give you a ‘heads up’ where to look. Similarly, the drivers of economic growth might surprise some people, as smaller cities not on the coasts are seeing improvements in private investment, population growth, and credit expansion.

What keeps you up at night?

In terms of investment-specific risks: yield-chasing, ETFs, geopolitics, residential over-development in major metro areas.