Preqin’s Hedge Fund Investor Profiles database tracks the future plans of investors allocating capital to hedge funds through its Fund Searches and Mandates feature. Of these investors, approximately 40% have included a global macro component (commodities, foreign exchange, fixed income, macro, and managed futures/CTA strategies) in their search for new hedge fund opportunities. The current state of the global economy and recent events worldwide make global macro strategies appealing to hedge fund investors. The drop in oil prices and the increased strength of the US dollar are having a profound effect on the global economy, while European events such as the Greek debt crisis and its effect on the European Union (EU) economy, unrest in Ukraine and the resulting sanctions imposed on Russia, and the increased volatility of the ruble are also having a global impact. The potential gains that global macro strategies offer have not been lost on investors, with many looking to target this space over the coming months.
The chart below shows the top 10 most sought-after hedge fund strategies by institutional investors, according to the last 12 months of searches issued, with the dark blue columns representing global macro strategies. Twenty-seven percent of investor searches included pure macro strategies, second only to long/short equity. Meanwhile, managed futures/CTAs and fixed income were included in 13% and 7% of investor searches respectively. Institutional investors actively searching for global macro funds are planning to invest, on average, a minimum of $125mn in new opportunities in the asset class, which could represent a significant boost for the hedge fund industry.
Preqin’s Hedge Fund Investor Profiles’ Future Searches and Mandates module shows that global macro strategies have been highly sought after over the last 12 months. After analyzing the investors that have expressed interest in investing in hedge funds, we can start to develop a profile for the investors that have expressed a specific interest in global macro strategies. Fund of hedge funds managers represent the largest proportion of investors that have recently initiated searches for global macro hedge fund strategies, accounting for 57% of the investor pool. While investors based in Western Europe make up only 28% of all institutional investors actively searching for new hedge fund opportunities, they are the largest group of investors actively searching for global macro funds, constituting 40% of this group of investors. This may be a direct result of the turmoil existing in many European economies.