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Springtime for Futures

March and April were very good for managed futures, a contrast to the losses at the beginning of the year and in 2009. The strategy's year-to-date return is now close to the average for hedge funds overall. The S&P 500 did better than commodity trading advisors and hedge funds as of April, but the Greek debt crisis and increased volatility in May ushered in a tougher environment for stock markets.

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Global macro stayed in the ballpark of the broad hedge fund index year to date. Research from Credit Suisse concludes that this strategy had mixed results in the first quarter but may still benefit from opportunities created by diverse central bank policy responses, growth conditions and the re-emergence of sovereign risk.

Boris Arabadjiev, chief investment officer of Credit Suisse's fund of funds group, points out that the difference in returns between hedge fund strategies narrowed during the past few months. This suggests that individual strategy selection has become less crucial for many investors who are focused on the benefits of diversified exposure to hedge funds.

Assets continued to trickle back to hedge funds in the first quarter, with a $2 billion new inflow estimated by Credit Suisse. Managed futures received only a small portion of the new money, but CTAs remain positive about investors' response.

One indicator is managers' strong interest in capital introduction events. Lisa Vioni, chief executive of Hedge Connection, is organizing an online get-together for managers and high-net-worth investors, advisors and family offices, to take place in June. She says there will be a track with up to 10 CTAs and a track with up to 10 global macro managers. She's seen interest from CTAs, including a large manager.

The 2009 loss in managed futures discouraged fund of funds allocations. In any event, the share of fund of funds in hedge fund assets have shrunk in the past two years, from close to half to less than one-third by some estimates. Still, certain fund of funds express interest in futures strategies with specific characteristics.

Fears raised by the debt turmoil in Europe and the impact of this on equity markets may boost the attractiveness of hedge fund strategies, including global macro and CTAs.