Hedge fund managers warn of Italy/Spain defaults

Around 42% of hedge fund managers see the potential for a default or restructure by Italy and Spain, according to a survey.

Conducted over recent weeks, the Aksia survey of 125 funds representing more than a third of total hedge assets also found 60% of managers see a similar prospect of Greece leaving the euro.

Meanwhile, a total of 65% think EU member states may issue eurobonds.

Around 94% of managers called for further monetary easing by European authorities and 80% believe the US Federal Reserve's ‘Operation Twist' will ultimately fail to impact financial markets.

The survey also highlights that hedge fund managers hold more bearish views on global and Chinese GDP growth than 2012 International Monetary Fund forecasts.

They also expect markets to remain range-bound over the next 12 months - driven by macro factors rather than fundamentals. Global Macro is predicted to be the best performing hedge fund strategy.