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Institutional Appetite for Managed Futures / CTA hedge funds.

by Graeme Terry

  • 26 Mar 2012
  • HF


Preqin’s Hedge Fund Investor Profiles database currently contains profiles for 570 institutional investors that indicate a preference for managed futures / CTA hedge funds. This represents approximately 17% of all investors on the Preqin database. Of these investors 50% are based in North America, 38% are based in Europe and 12% are based in Asia and Rest of World.

Funds of hedge funds are the main source of institutional capital for managed futures funds, representing approximately 41% of all investors that indicate a preference for this strategy. Genesis Research & Asset Management is an example of a fund of hedge funds manager that offers a fund of hedge funds focused on managed futures funds and it aims to add new funds to this portfolio over the course of 2012. Many managers see managed futures funds as playing an important role in adding diversification to a hedge fund portfolio and these funds can also provide returns which are uncorrelated to other hedge fund strategies.

Managed futures funds are also growing in popularity with public pension funds due to the additional liquidity and transparency that these funds can provide. At present, 22% of all public pension funds on the Preqin database indicate a preference for this strategy. For instance, Royal County of Berkshire Pension Scheme recently added a single manager CTA fund to its portfolio.  Managed futures funds are also popular amongst asset managers (21% indicate it as a strategy preference), endowments (14%) and insurance companies (13%) but tend to be less popular with foundations (7%) and private sector pension funds (6%). Norwegian insurance company Gjensidige Forsikring is amongst those investors looking to increase its exposure to CTA funds in 2012.

Managed futures has been one of the fastest growing hedge funds strategies in recent years as investors start to appreciate the diversification benefits that such funds can provide. There is evidence to suggest that a number of investors are planning fresh allocations to the strategy in 2012 offering the potential for managed futures fund managers to attract significant institutional capital over the next 12 months.

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