Asset owners increasingly are turning to global macro and managed futures strategies in their efforts to diversify their portfolios.
Institutional investors have invested at least $2.6 billion in 2015 in the two approaches, with global macro bringing in $1.5 billion and managed futures, $1.1 billion, according to Pensions & Investments' reporting.
Actual investment totals likely are higher because many institutions don't release information about their investment changes. Indeed, one manager reported $3 billion of inflows to its global macro strategies alone so far this year.
The resurgence of institutional investor interest in these subsets of the hedge fund industry this year is all about the lack of return correlation they have with traditional asset classes, said Arvin Soh, portfolio manager in GAM Group AG's alternative investment solutions unit in New York.
Both strategies are popular as portfolio diversifiers because some asset owners with a tolerance for choppy — but profitable returns — want to capture “crisis alpha” during short or prolonged market downturns.
Systematic, trend-following managed futures traders are best-suited to corral this form of alpha, albeit with a high probability for volatility, Mr. Soh said.
By contrast, global macro strategies, which take a top-down approach to interpreting broad market trends, are better suited for investors with weaker stomachs when it comes to volatility.
GAM runs a dedicated portfolio of managed futures and global macro funds with assets currently split evenly between the two, Mr. Soh said. GAM manages a total of $122.3 billion.