- Advertisement -
- Advertisement -

Related

Muted Appetite for Hedge Funds

Latest Report

This year’s Alternative Fixed Income report from HedgeNordic explores how institutional investors and asset managers are navigating this new reality, balancing yield and resilience amid shifting credit cycles, structural change, and evolving sources of return.

Stockholm (HedgeNordic) – Hedge funds recouped the losses incurred in February and March after a strong second quarter, but hedge fund investors are not in a hurry to commit fresh capital. About two-thirds of hedge fund mandates issued by allocators in the second quarter were for total commitments of less than $50 million, writes Preqin. There were no mandates issued for investments of $300 million or more, down from nine percent in the first quarter.

“Hedge funds were buoyed by a general market bounceback in Q2, and were able to wipe out losses incurred in Q1,” Christopher Beales, Hedge Fund Spokesperson, said in a statement. “There is an opportunity for funds to capitalize on investors’ shift in sentiment if they can demonstrate their defensive capabilities, but it will still be an uphill battle,” he continued. However, “overall sentiment remains low, and new funds in particular face a challenge in convincing investors to take a chance on them,” pointed out Beales.

Amount of Fresh Capital Investors Expect to Invest in Hedge Funds over the Next 12 Months. Source. Preqin Pro.

About 67 percent of mandates issued by investors in the second quarter were for total commitments of $50 million or less, equal with the proportion recorded in the first quarter. In the second quarter, however, larger mandates became less common. According to Preqin, there were no mandates issued for investments of $300 million or more in size in the second quarter, down from nine percent in the first quarter. “Hedge fund investors were cautious in the second quarter of 2020,” writes Preqin.

Based on fund searches in the second quarter, investors had the most appetite for long/short equity strategies, “perhaps in anticipation of equity markets’ continued recovery.” Long/short equity strategies featured in 64 percent of mandates. Long/short credit strategies, meanwhile, appeared in 36 percent of mandates, up from 23 percent in the first quarter. “Amid dislocated credit prices and potential distressed opportunities, a number of managers announced plans to target the credit space in Q2 2020,” writes Preqin. There was no appetite for funds of hedge funds, as no active mandates for this group were issued in the second quarter.

Photo by Mika Baumeister on Unsplash

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

A Story of Data in the Age of Data Deluge

Transtrend started as a research project in 1989. We had bought data and computers, hoping something could be done with that. So, that’s what...

Proxy P’s Bet on Traditional Utilities Amid AI-Driven Power Surge

Since its launch in late 2018, fund boutique Proxy P Management has managed a directional long/short equity fund focused on renewable energy and energy...

November Halts Nordic Hedge Fund Momentum

After six consecutive months of gains, the Nordic hedge fund industry recorded a slight dip in November, edging down 0.3 percent on average. With...

Trade-off Between Illiquidity and Rebalancing Premium

In the search for diversification and higher returns, institutional investors worldwide have steadily increased their exposure to illiquid asset classes such as private equity,...

Diversification in the Era of Monetary Reset

Diversification has long been a cornerstone of investing, designed to balance risk across different markets and asset classes. But with fiat currencies under persistent...

Three Years In, Norselab’s Flagship Fund Reaches More Radars

After years of co-managing Alfred Berg’s high-performing high yield fund, Tom Hestnes has spent the past three years proving his strategy in an alternative...

Allocator Interviews

In-Depth: Diversification

- Advertisement -

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.