South African hedge fund investors Momentum Global Investment Management have hired analyst Kris Richmond from rival PAAMCO to examine strategies that last month bucked their industry's losing trend and are most favoured by investors in future.
South African hedge fund investors Momentum Global Investment Management have hired analyst Kris Richmond from rival PAAMCO to examine strategies that last month bucked their industry’s losing trend and are most favoured by investors in future.
One of the strategies Richmond will cover at MGIM – fixed income – is also enjoyed strong demand from allocators seeking safety from heavily directional strategies.
A quarterly poll, of 51 investors with over €60bn in Ucits hedge funds, by Swiss platform provider ML Capital Asset Management found 60% plan to increase exposure to fixed income funds.
Redemptions from equity long/short seem to fuel their rotation, as demand for this strategy’s US and global manifestations fell more than 25% in the second quarter.
At MGIM Richmond will focus on fixed income arbitrage, as well as macro and volatility strategies. The first two were the largest exposures of MGIM’s flagship Global Spread Capture fund of funds by the end of May, each representing over 17% of allocations.
Fixed income funds posted the industry’s second best returns last month, with 0.9%, while macro was marginally positive.
In May – the latest month for which Global Spread Capture’s returns were publicly available – the fund of funds fell 0.2%. This year it is up 1.22%.
Overall, the industry is down 1.38% this year, and fell 0.14% in June, marking its worst losing streak since 2008.
The importance of analysing funds to pick good from bad – which Richmond will help do – was shown by Eurekahedge’s finding that over 500 funds, or about 5% of the $1.75trn industry by number, are up 10% or more this year.