- Advertisement -
- Advertisement -

Related

Credit Hedge Funds Poised for Comeback

Latest Report

- Advertisement -

Stockholm (HedgeNordic) – Credit-focused hedge fund strategies faced an extraordinarily challenging environment so far in 2022 as credit markets sold off significantly. Despite the underwhelming performance, investors plan to increase their exposure to credit strategies amid a more conducive market environment for active managers.

According to a SigTech survey of 119 institutional investors, two-thirds of respondents plan to increase their allocation to hedge funds in the next two years. Credit strategies have emerged as the most popular strategy category, with 40 percent of respondents indicating they expect to increase their exposure to this strategy group. Managed futures and multi-strategy followed in popularity, with 32 percent and 31 percent of respondents planning to increase allocations to these two strategy categories. The survey was conducted from October 28 to November 12, where half of the respondents are based in North America, 42 percent are based in Europe and the rest are from Asia.

“I’m not surprised that managed futures and multi-strategies were number two and three, because they’ve been doing well,” says Daniel Leveau, vice president of investor solutions at SigTech. “Credit, for me, is hard to explain,” he acknowledges. Credit strategies lost 8 percent on average year-to-date through the end of October, according to eVestment. Similarly, fixed-income-focused funds within the Nordic Hedge Index lost 8.9 percent year-to-date through the end of November. “There are opportunities [where]investors believe hedge funds can profit from the movements in the yield curve and credit spreads,” according to Leveau.

“There are opportunities [where]investors believe hedge funds can profit from the movements in the yield curve and credit spreads.”

A survey by Preqin in November also finds increasing investor interest in credit strategies. According to Preqin’s Global Report 2023 based on a November survey, 41 percent of hedge fund investors want to increase their allocation to credit strategies, the second-most popular strategy category after macro. Macro strategies, however, gained 4.5 percent in the first three quarters of 2022, compared to an average loss of 5.2 percent for credit strategies, according to Preqin.

“The good news for [credit strategies]is that the central bank is stepping away from the markets,” Sam Monfared, vice president of research at Preqin, tells Institutional Investor in an interview. “They are not buying bonds anymore… When prices are set by the market and are not significantly influenced by the central bank, [credit managers]can comfortably rely on [their]valuation models.”

“The good news for [credit strategies]is that the central bank is stepping away from the markets.”

According to the Preqin report, about 40 percent of investors believe the conditions for credit strategies will improve in 2023. Credit strategies represent the second most promising strategy category next year after equity strategies. “In a sense, the Fed has been moving its put further out of the money by design,” writes the Preqin report. “This presents an opportunity for active managers to take advantage of better prices and it positions credit strategies for a subsequent recovery.”

 

Photo by Nicholas Cappello 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

Hedge Funds Pay Off for the State Pension Fund of Finland

Finland’s largest institutional investors remain committed allocators to hedge funds, yet the State Pension Fund of Finland’s (VER) hedge fund allocation stood out as...

Carl Berg to Lead Niam’s Capital Formation Efforts in Sweden

Private markets firm Niam Group has strengthened its Capital Formation and Investor Relations team with the appointment of Carl Berg as Capital Formation Director...

Statistical Outlier Year for HCP Black

When HedgeNordic spoke with Tommi Kemppainen in early 2019, the CEO of Helsinki Capital Partners outlined a defensive positioning for the multi-strategy fund HCP...

Nordea Adds Systematic Fixed Income Expertise

Nordea Asset Management (NAM) has strengthened its data-driven investment capabilities with the addition of two London-based professionals, Lucette Yvernault and Marton Huebler, marking the...

From Short-Term Opportunity to Long-Term Outperformance

Borea Utbytte, a banking sector-focused equity fund under Norwegian boutique Borea Asset Management, celebrated its five-year anniversary at the turn of September to October....

Record Month for Tidan in Priced-to-Perfection Credit Market

Tidan Fund, a Stockholm-based hedge fund specialising in opportunities across corporate capital structures, marked its four-year anniversary in September with its strongest month on...

Allocator Interviews

In-Depth: High Yield

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.