Part of the current hedge fund manager rotation may also be going to managers offering portfolio protection as well as positive returns, the sources said.
“Investors are most interested in defensive, diversifying hedge fund allocations,” stressed Christopher W. Walvoord, partner and global head of liquid alternatives research and portfolio management, based in Aon Investments USA Inc.’s Chicago office.
Mr. Walvoord said institutional investors in particular are “looking for bond substitutes given predicted low returns for traditional fixed income such as event-driven, relative value, insurance-linked securities and opportunistic credit hedge fund strategies.”
“Given uncertain markets, investors need to find a return stream. Who knows what equities will do after their big bounce back? Bonds are yielding zero. Hedge funds are one place institutional investors are looking to for protection and returns,” Mr. Walvoord said.
Hedge fund managers said they have been seeing more hiring activity from North America than other regions.
London-based systematic manager Aspect Capital Ltd. has had “asset-gathering success in the U.S., particularly from public pension funds. U.S. investors have hardly skipped a beat in hiring, but European, Japanese and Australian investors have been slower to engage during the COVID-19 pandemic,” said Martin Lueck, co-founder, president and research director.
Mr. Lueck said the firm has been having “two conversations with investors now,” with some…