Hedge fund mid-year trends and strategies currently in demand

By Donald A Steinbrugge, CFA, Founder and CEO, Agecroft Partners – The hedge fund industry is dynamic, comprising numerous strategies that attract varying degrees of interest over time. Demand for each strategy is impacted by many variables including capital market valuations, expectations of economic growth, market liquidity and risk appetite among others. 

Industry professionals spend a great deal of time analysing these variables in order to identify which strategies they believe offer the best opportunities for outperformance. In this paper, we share some data and thoughts on where investors are focusing their time and resources starting with a brief overview of developments year to date.

2020 has been one of the most volatile years for the capital markets over the past century. The year began with questions looming about the sustainability of the seemingly ever-rising equity markets. That uncertainty accelerated dramatically at the end of the first quarter. Equity and credit markets experienced material market value declines in response to the expectation of a sharp economic stall instigated by COVID-19. Generally, most hedge fund strategies performed in line with investors’ expectations. Still, some less liquid fixed income strategies that were not properly hedged sustained large, unanticipated, drawdowns leading to large redemptions. In some cases managers imposed gates and suspended redemptions. A flight to quality by…

Read more