Over the course of H2 2014, Preqin’s Hedge Fund Investor Profiles online service saw 212 investor mandates added to our Fund Searches and Mandates feature. These investors have initiated fund searches for a variety of hedge fund strategies, structures and regional preferences to allocate new capital to over the next 12 months. In this blog, we take a look at the investors that have issued fund searches over the past six months by hedge fund strategy, and identify which were the most sought-after strategies during H2 2014.
Long/short equity shows its prominence in the space by being the most sought after strategy among investors over H2 2014, as shown in the chart above. The strategy is the most recognizable of all hedge fund strategies and offers investors exposure to unique hedging strategies against market volatility. One example of an investor with an interest in long/short equity funds is fund of hedge funds manager Notz Stucki Group, which is currently looking for a number of hedge funds in which to invest over the next 12 months. The firm, based in Luxembourg, has a global focus and has been investing in hedge funds since 1974.
Twenty-eight percent of investors have initiated searches for hedge funds that employ a macro strategy over the next 12 months, making macro the joint second most sought after strategy (along with diversified strategies) over H2 2014. The proportion of investors interested in this strategy remains unchanged from H1 2014, demonstrating investors’ sustained interest for opportunities within this strategy. Furthermore, funds employing a pure macro strategy have performed well this year, according to Preqin’s Hedge Fund Analyst online service, posting their best month in November 2014 (+2.23%) since September 2010 (+3.33%).
Other strategies also saw an increase in interest from investors over the past six months. Long/short credit and managed futures/CTA strategies each accounted for 12% of investor searches, up from 9% each in H1 2014. Long/short credit experienced good performance over the year in comparison to Preqin Hedge Fund All Strategies benchmark, generating 4.42% for November 2014. Similarly, CTA funds outperformed the All Strategies hedge fund benchmark in 2014, seeming to attract a slightly higher proportion of investors, based on fund searches over the past six months.
Over the course of H2 2014, investors have shown an interest in a variety of hedge fund strategies. As in previous years, long/short equity is the most sought after hedge fund strategy by investors. Strong performance by certain strategies over the past year could be a key factor affecting the proportion of investors seeking particular strategies, where some have demonstrated considerable potential to outperform the main industry benchmark for 2014.