News Digest:

Institutional investors are showing a growing preference for fixed-income hedge funds, with a majority expecting strong returns despite ongoing market uncertainty. According to a report by RBC BlueBay Asset Management, 63% of investors anticipate annual returns of at least 10%, reflecting renewed confidence in these strategies.

However, the study also reveals a gap between expectations and actual performance. While optimism is high, only 47% of investors achieved double-digit returns, while 52% saw gains of 5-9%. This disconnect underscores the challenge of aligning return ambitions with market realities.

Fixed income hedge funds are now an integral part of institutional portfolios, with 60% of respondents currently invested in hedge funds and 84% of them allocating capital to fixed income strategies. Key drivers of demand include strong historical performance (65%), more flexible fee structures (48%), and increased market liquidity (45%).

Despite the appeal, investors remain cautious about geopolitical risks (60%) and interest rate policies (58%). These concerns are influencing allocation decisions, with 36% funding hedge fund investments via new inflows, 25% reallocating from other alternative strategies, and 42% shifting toward higher-yielding assets.

With 61% of investors planning to evolve their hedge fund exposure in the coming year, fixed income strategies remain a critical focus amid uncertain macroeconomic conditions.

End Notes

Source: https://www.hedgeweek.com/investor-appetite-for-fixed-income-hedge-funds-surges-amid-market-volatility/