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Hedge Fund Strategy in Focus: CTA/Managed Futures

Over the past months there has been a surge in the number of institutional investors stating CTA as a strategic preference. The credit crisis and financial meltdown in 2008 resulted in a pressing need for institutional investors to find investment products that provide both transparency and liquidity within their portfolios. CTAs are a highly liquid strategy with very short or no lock-up periods and have been an attractive fund choice for investors through the financial tumult. Investors, though more positive about hedge funds in the second half of 2009, remain cautious when making new commitments and are choosing funds such as CTAs which can offer liquidity as well as diversification to their portfolios.

Public pension funds are at present one of the largest sources of capital for CTA managers, with over a quarter of all pension funds active in hedge funds stating CTA as a preference. Currently more public pension funds are actively searching for CTA investments than long/short equity funds. Endowments and family offices/foundations are other large institutional investors in managed futures as these investors seek to return liquidity to their portfolios and rebalance their hedge fund portfolios which became over weighted in certain areas following the gating and illiquidity of the hedge fund industry in the latter half of 2008.

Preqin currently holds profiles for 377 institutional investors with an active interest in this sector, including 243 North American-based, 101 European-based and 33 Asia and Rest of World-based institutions.

For more information on institutional investors in hedge funds, please see Preqin’s Hedge Investor Profiles.

Keywords: hedge funds, hedge fund strategies, CTA, managed futures, hedge fund investors