fund clients look to global macro funds for profit in
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[January 30, 2016]
By Svea Herbst-Bayliss
BOSTON (Reuters) - As 2016 shapes up to be
even more unpredictable than last year, wealthy investors are planning
to allocate more of their money to hedge funds focusing their bets on
rates, currencies and commodities rather than stocks, a strategy which
tends to fare better in volatile environments.
So-called global macro funds, like the ones run by industry icons
Paul Tudor Jones, Alan Howard and Ray Dalio, are expected to rank
among this year's best performers, according to J.P. Morgan's
Institutional Investor Survey 2016, gathering input from 322
investors controlling $910 billion in assets.
Some 16 percent of the respondents said they planned to add money to
the amount allocated to global macro funds. That marks the largest
net change for any hedge fund category this year, and a sharp
increase from 2015 when only 5 percent of the respondents said they
planned to add cash to global macro funds.
Last year, which contained a few surprises for investors, global
macro funds on average lost 1 percent and a handful went out of
This year, as uncertainty increases and lots of trading movements
are expected, global macro funds, managed futures funds and
quantitative long-short equity funds are back in favor, the J.P.
Morgan data showed.
"Strategies that tend to perform well in volatile markets are in
vogue right now," said Alessandra Tocco, global head of capital
introduction, consulting and strategic content for J.P. Morgan.
"Investors are concerned with lackluster performance among hedge
funds and are taking a closer look at their hedge fund portfolios."
The new appetite has been on display at former Brevan Howard partner
Chris Rokos' new fund, which has raised $3.5 billion. Former Soros
Fund Management chief investment officer Scott Bessent is also
preparing a fund which investors say will be popular.
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While investors may not want to raise their overall allocation to
hedge funds, they will likely rearrange their roster of managers
after 70 percent of respondents said their hedge fund investments
failed to meet targeted returns in 2015.
That marks a dramatic decline from 2013 when 90 percent said their
funds hit target rates.
One reason for last year's poor returns may be managers' tendency to
crowd into the same trades, investors said, adding that they expect
to make the biggest moves at stock-oriented funds.
(Reporting by Svea Herbst-Bayliss; Editing by Bill Rigby)
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