Survey: Rising Concerns Over Slowing Economic Growth in 2019 Could Drive Changes in Hedge Fund Investing

FAIRFIELD, IA/SUMMIT, NJ (Jan. 15, 2019) ― Hedge fund investors are growing more concerned over slower economic growth in the year ahead, which could be prompting a noted shift toward global macro managed futures strategies, according to the results of a survey published today by BarclayHedge, now a division of Backstop Solutions, and Markov Processes International (MPI).

The BarclayHedge, MPI Hedge Fund Investor Survey collected responses from 116 institutional hedge fund investors and fund of hedge fund managers about their thoughts on how the broader economic environment would impact hedge fund investing in 2019. Responses were collected between November 2 and November 27.

According to the survey, concern about slower global growth is on the rise. More than one third (38%) of respondents listed slower growth as the biggest risk in 2019, a significant jump from March, when 12 percent of respondents listed it as the top risk. Two other top investor concerns for 2019 are rising interest rates (29%) and a stock market reversal (21%).

Those concerns could be driving a shift in investor interest toward global macro managed futures and fixed income and away from equity strategies in 2019. One in four survey respondents (27%) believe the global macro managed futures sector will see the most interest in the next 12 months, up from 22 percent last year.

Interest in fixed-income strategies (17%) showed a notable 15-percentage-point jump from 2 percent last year. That shift could be driven by a reduced interest in equity-based strategies, which saw an 8-percentage-point drop (21%) from 29 percent last year.

“Growing interest in global macro managed futures strategies makes sense in light of the weakened commodity sector,” said Sol Waksman, president of the Backstop BarclayHedge division. “That could create opportunities for investors to cash in on a commodity bounce in 2019.”

Nearly half of respondents (48%) think low-correlation will be the hedge fund characteristic that delivers the highest investor value in 2019. Around a quarter, by contrast, give the nod to diversification (26%) and high risk-adjusted returns (25%).

“Equity market performance in December underscored the reality that the longest-running bull market in history could be nearing its end,” said Rohtas Handa, EVP, Head of Institutional Solutions at MPI. “More than anything, I believe that sentiment is driving survey results, which, at a very high level, can be viewed as a shift toward both passive and active strategies that are not correlated to equity markets.”

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Survey Methodology

The BarclayHedge, MPI Hedge Fund Investor Survey was sent to hedge fund investors and fund of hedge fund managers between Nov. 2-27, 2018. We received 116 responses from people working in funds-of-funds, multi-advisor futures funds, family offices, financial institutions, pensions, endowments, institutions, and other specialties. Respondents also included financial planners, wealth managers and registered investment advisers. Respondents were asked to select one answer for each question.

About Backstop Solutions

Backstop’s mission is to help the institutional investment industry use time to its fullest potential. We develop technology to simplify and streamline otherwise time-consuming tasks and processes, enabling our clients to quickly and easily access, share, and manage the knowledge that’s critical to their day-to-day business success. Backstop provides its industry-leading cloud-based productivity suite to investment consultants, pensions, funds of funds, family offices, endowments, foundations, private equity, hedge funds, and real estate investment firms. BarclayHedge, a division of Backstop, currently maintains data on more than 6,900 hedge funds, funds of funds, and CTAs. The BarclayHedge Indices are utilized by institutional investors, brokerage firms, and private banks worldwide as performance benchmarks for the hedge fund and managed futures industries.

About MPI

Markov Processes International (MPI) is a leading independent provider of quantitative investment research, technology and analytics for the global investment management industry. MPI’s flagship Stylus solutions are used by hundreds of firms to make smarter investment research, portfolio construction and optimization, performance analysis, risk surveillance, distribution and reporting decisions. MPI Stylus can be delivered as a desktop, enterprise-hosted or cloud-deployed solution. MPI’s Enterprise Solutions team also offers customized configuration and implementation services to meet your organization’s specific needs. For more than 25 years, MPI has been a trusted, transparent and objective investment technology and insights partner to the world’s leading pensions, endowments, sovereign wealth funds, wealth management firms, hedge fund managers, fund of hedge fund managers, institutional consultants, investment advisors, asset managers and securities regulators. Follow us on Twitter, connect with us on LinkedIn and read the latest MPI research.