Investors reduce exposure to directional strategies

Date: Thursday, July 19, 2012
Author: Emily Perryman, HedgeWeek

This quarter investors appear very reluctant to make strong bets and are planning to reduce their exposures to directional strategies with most equity long-short strategies seeing a significant drop off in demand for this quarter, according to ML Capital Management’s latest ML Alternative Ucits Barometer.

At the same time, the continued crisis in the markets is driving flight to perceived safety, resulting in increased demand for less market oriented strategies such as global macro, fixed income and equity market neutral.

The relative value area is one of the biggest winners this quarter. 60 per cent of respondents are keen to up their exposure into fixed income funds, while the last two months has seen a doubling in demand for market neutral funds, with over 40 per cent looking to increase their holdings.

There has been a sharp drop in confidence in previously top rated US and global equity sectors, with in excess of a 25 per cent drop in demand this quarter.

There are brighter prospects for two of the main long-short strategies, with demand for Asian and European strategies remaining relatively strong.

The barometer is designed to help identify and anticipate key trends in the demand for the major strategies within the alternative Ucits sector.