Are Macro Funds Becoming More Attractive to Investors? – August 2014

by Nat Auld

  • 12 Aug 2014
  • HF

After several months of decline, investor appetite for macro hedge funds is showing some signs of recovery. This would seem to tie-in with the improved performance of macro funds during Q2 2014, as recorded on Preqin’s Hedge Fund Analyst, and the resurgence in the number of macro funds being launched.

Over the first half of 2014 we saw a decline in the proportion of investors searching for macro funds on Preqin’s Hedge Fund Investor Profiles online service. However, in the first month of the second half of the year there was an increase in the number of investors which are searching for macro funds. Nevertheless, there remains a marked discrepancy between the proportion of investors willing to invest in macro funds and those actively seeking to invest in the strategy at the moment. Forty-one percent of all investors cite macro as one of their preferred strategies, compared to just 17% of the investors that issued fund searches in July including the strategy in their searches.

This year demand for macro funds has been more prevalent in some quarters than others. Fund of hedge funds managers, for example, make up 27% of investors which cite a preference for macro, but make up 54% of the investors who have issued fund searches for macro funds in 2014. Conversely, foundations make up 14% of investors with a preference for the strategy, but only 1% of those who have issued macro fund searches this year. In terms of location, the strategy is particularly common among investors based in West Europe, which make up 29% of total investors which have issued fund searches in 2014, but 54% of investors which have issued macro fund searches.

It is too early to tell how enduring the resurgence of investor appetite for macro funds will be. 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.

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