A new survey from SG Prime Services and Clearing shows that there is strong interest in global macro and trend-following CTAs versus other hedge fund strategies. The survey ,which includes 148 unique investors, states that these allocations will be implemented within the next six months for 2/3rds of the investors.
The survey also focuses on whether on the logistics of getting allocations made. It finds that about 1/3 of investors have already made or will likely make allocations without an on-site due diligence. Allocation life is continuing in a pandemic. The authors also reset their initial questions based on those that are active and able to invest in the current COVID-19 environment. In this case, there is an even stronger focus on global macro and CTAs.
The important question is why do investors place the strong emphasis on the global macro and CTA hedge strategy space. For some this may seem obvious, yet understanding the market scenarios within the minds of investor is most useful. If trend-followers provide positive convexity and "crisis alpha", an increased desire to hold this strategy reveals a higher weight on a potential macro crisis. There is a likely second down phase to this pandemic. The global macro demand suggests that large asset class switching will be necessary during the coming year.
These allocations focus on two themes - downside tail risk and a reshuffling of asset class returns. It is expected that global macro and trend-followers will be able to adjust risk exposures quicker than any asset allocation investment committee.
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