Investors Warming Up Again to Macro Hedge Funds?

The number of new macro hedge funds launched and investor appetite for the approach have picked up after sliding for months, according to Preqin data.

Investors searching for macro managers fell in the first half of 2014, continuing the strategy’s decline from 2013. Since then, however, more asset owners have sought out data and information on this class of hedge funds.

Short-term performance by macro managers has likewise improved.

Western Europe has been the hotspot of investor demand, Preqin found, representing 54% of all investors who have issued macro searches this year, but only 29% of searches overall.

The approach also has other fans that haven’t translated into new clients. Foundations, for example, account for 14% of investors that prefer macro managers, but only 1% of those who have issued searches for one.

This recent uptick in investor interest follows years of tepid attraction to the strategy. Over the five years following the financial crisis, macro hedge funds had cumulative returns of roughly half the industry average, according to eVestment.

Developed equities market returns have put hedge funds as a whole to shame over that time period, but may in fact be a boon for macro managers.

“Macro hedge funds are a way to get certain exposures that diversify away from equities,” Francis Frecentese, Lyxor Asset Management’s global head of hedge fund research, told CIO earlier this year. “Markets were up 30% last year. If asset owners want to move away from that, macro is one of the places to go. That’s what we’ve been hearing from our clients lately—interest has been healthy.” 

According to Preqin, it is too early to tell if the uptick in manager searches portends a true popularity boost for macro funds. 

“However, the strong Q2 performance of the strategy, combined with the disparity between many investors’ willingness to invest in the strategy and the extent to which they are currently seeking to gain exposure to it, all suggests that there is room for investor searches in the strategy to increase further,” the data provider wrote. 

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