By Carolina Mandl
NEW YORK, Feb 24 (Reuters) - Investors such as pension
funds and family offices plan to increase allocations to credit
and global macro hedge funds in 2023, although their overall
appetite for hedge funds is weaker this year, a survey by
Barclays PLC showed on Friday.
The bank interviewed 302 investors, including pension and
sovereign funds, insurance companies, endowments, foundations
and family offices with $7.5 trillion in assets under
management. The investors were based in the Americas, Europe,
the Middle East and Africa.
"Credit is very much in favor as well as the more
diversifying strategies," said Roark Stahler, U.S. head of
strategic consulting at Barclays. Demand for equity hedge funds,
meanwhile, is low, the report said.
Investment intentions favoring macro hedge funds come after
a year in which that strategy, which trades globally a broad
range of assets, such as bonds, currencies, interest rates,
stocks and commodities, posted the best performance in the
industry.
Globally, macro hedge funds had gains of 9% last year, while
equities hedge funds, down 10.2%, were the worst performers,
data provider HFR said.
Good returns are likely to lure fresh money to macro funds
this year, as 28% of investors intend to add to their current
portfolios, the Barclays survey found.
Increased allocation to credit hedge funds has appeared as a
new trend, and 34% of surveyed investors also intend to put more
money into distressed funds - those that buy bonds of firms that
are failing to pay debts.
The survey also showed that, although investors still plan
to increase allocations to hedge funds, their intention has
decrease roughly 10% from last year, to 19% of the investors
surveyed.
Big investors, such as pension and sovereign funds,
insurance companies, endowments and foundations, are planning to
roughly maintain or even trim their hedge fund exposures in
2023, while more private banks and family offices see room for
additional allocations.
The survey showed the main reason for a meager appetite for
hedge funds, mentioned by 56% of investors, was a need to
rebalance portfolios after a rough year for stocks. The next
major reason was poor portfolio manager performance, cited by
31%, the survey showed.
Overall, hedge funds lost 4.2% last year, but they still
outperformed the S&P 500, which sank roughly 20%. That left
hedge funds accounting for a bigger portion of portfolios,
exceeding limits set by investment committees. To rebalance,
some investors are forced to divest.
"There's capital outflows as a result of that - hedge funds
being a victim of their own success," said Stahler.
(Reporting by Carolina Mandl; Editing by Bradley Perrett)
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