- Advertisement -

Related

Muted Appetite for Hedge Funds

- Advertisement -

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

The Illusion of Longevity: Why Averages Mislead in Hedge Fund Survival

Longevity is not a defining feature of the hedge fund industry. Wide performance dispersion, impatient capital, and a high fixed-cost base create a fragile...

Elo’s Slow-Moving Hedge Fund Portfolio Built Around Access

Soon after Kari Vatanen joined Finnish pension insurer Elo as Head of Asset Allocation and Alternatives, he praised the team behind the firm’s hedge...

The New Coda: From Intuition to a Unified Investment Process

Peter Andersland is best known in the Nordic hedge fund space as the co-founder of Sector Asset Management, where he remains a shareholder. While...

When Diversification Fails: Qblue’s Case for Alternative Risk Premia

The notion that a traditional 60/40 portfolio offers meaningful diversification has long been questioned by practitioners. When implementing the Total Portfolio Approach at Danish...

Tidan NOVA Profiting from Volatility Skew as Market Participants Seek Protection

Tidan Capital’s evolution into a multi-strategy platform reflects a broader effort to deliver complementary sources of alpha, with its NOVA strategy serving as a...

Extracting Alpha from the Factor Zoo Through Systematic Investing

There are multiple ways to approach equity investing and, ultimately, the pursuit of alpha. While many strategies rely on market direction or discretionary stock...

Allocator Interviews

In-Depth: Diversification

- Advertisement -

Voices

Request for Proposal

- Advertisement -