Global macro hedge fund strategies are becoming increasingly popular, whereas there is an accelerating shift by investors away from converti...

Global macro hedge fund strategies are becoming increasingly popular, whereas there is an accelerating shift by investors away from convertible arbitrage strategies, according to European hedge fund advisory firm TARA Capital’s newly released results of its latest Hedge Fund Strategy Barometer. The survey of institutions with a combined $74 billion allocated to hedge funds shows movements in asset allocations across the primary hedge fund strategies. The survey reported that not one single respondent indicated they were willing to increase their convertible arbitrage allocations, while 89 per cent said they were considering decreasing allocations to this strategy. This is the largest negative score ever recorded by any strategy since the launch of the barometer one and a half years ago. “These results would appear to suggest that the whole viability for the convertible strategy is in serious doubt," said John Lowry, chief executive and founder of TARA Capital, although he did not rule out the possibility of a recovery, saying the strategy may be near a "historic low." In the relative value area this quarter, fixed income strategies were the big winners. Multi-strategy, traditionally one of the most popular of the strategy groups, continues its rise in popularity with 67 per cent of respondents planning an increase. The popularity of distressed strategies has continued its fall, but demand for merger arbitrage funds is on the increase. Interest in global long-short funds has halved although US long-short equity is an area of growing interest. European and emerging markets long-short funds continue to see strong investor support. Managed Futures/CTA strategies are continuing to increase in popularity, with 33 per cent of those surveyed planning an increase in this sector. The results also show very strong interest in global macro discretionary managers with 63 per cent of respondents planning an increase to the sector as investors expect increasing choppy markets. Overall, TARA said that many investors are "losing faith" in certain strategies and managers and that many are now placing more emphasis in quantitative analysis to select managers.