A new survey of European institutional investors indicates that global macro and global long short are the most popular hedge fund strategies.
The survey results were revealed by TARA Capital, a Geneva based investment advisory firm, as part of its third quarterly hedge fund barometer.
According to the survey: "In a year of unprecedented interest and growing commitments to hedge funds from major institutions the funds most in favour with European based investors appear to be Global macro and Global long short strategies."
These results are based on the latest quarterly survey of 25 European located institutions undertaken in spring of 2004. The institutions surveyed have a combined EUR 79 billion allocated to hedge funds. Tara Capital estimates that these investors account for approximately 10% of the total assets invested into hedge finds worldwide.
* Global Macro discretionary strategies are the biggest winner this quarter. John Lowry, founder and Managing Director of Tara Capital commented that "following the relatively difficult month of April particularly for this strategy it will be interesting to see whether the actual levels of inflows will match the earlier strong commitment to the sector."
* Other "in favour" categories are Global long short equity, European long short equity, managed futures and multi-strategy, all listed as preferred categories. Lowry further comments that "half of the respondents indicated that they would be increasing allocations to global l/S funds indicating a growing reluctance to predict the direction of individual markets, although interestingly the results show that European investors continue to have a lot more confidence in European equity managers than they do in US managers".
Least Favoured Strategies
* Strategies now out of favour are US l/s equity, fixed income and emerging market strategies. The fixed income showing a dramatic drop in interest levels over earlier surveys primarily due do the spreads tightening.
Previously Popular Strategies moving out of Favour
* Japanese hedge funds had been the most popular of all strategies since inception of the Barometer, however the latest results show a decline in its popularity although from an admittedly very high base.