Market volatility earlier this year caused a significant proportion of investors surveyed for the latest quarterly BarclayHedge, MPI Volatility Angst Survey to shift their outlook on equity markets, along with views on economic growth and use of managed futures.
The shift was identified after an early February spike in the VIX index. The 164 investment professionals responding to the survey identified rising rates and geopolitical concerns – such as around the threat of a trade war – as key concerns when looking forward over a 12-month period.
When asked how they might adjust portfolios, respondents pointed to diversification by asset classes or strategies (28.6%) or allocation to alternatives (23.2%) A further 23.2% suggested increasing cash exposure.
Managed futures have typically been used to profit from falls in equity markets, but the survey notes that managed futures strategies showed less ability to provide the hedge against the volatility seen in February. This may suggest that traders need to consider whether it was a “blip” or sign of a “deeper problem” said Sol Waksman, founder and president of BarclayHedge.
The survey also sourced views on hedge fund fees. Just a quarter, 25.7% of respondents said they were satisfied with fees as they currently are set. Most said fees are still high or that they wanted them to come down further.