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Bailey McCann, Opalesque New York: Global institutional investors are feeling bullish about the return potential from fixed income hedge funds, according to new research from RBC BlueBay Asset Management. The report revealed that nearly two-thirds of global institutional investors (63%) expect annual returns of 10% or higher from fixed income hedge funds.
Fixed income hedge funds have become mainstream among global institutional investors as they seek higher yields without liquidity. Of those who responded to the survey report, 60% are currently invested in hedge funds, and of these, 84% are allocated specifically to fixed-income strategies.
Adoption of hedge funds is consistent across the regions
explored globally, except for Germany, where allocations
are lower.
Fifty-two percent of investors said their annual fixed income hedge fund performance ranged between 5-9%.
Notably, investors are seven times more likely to increase hedge fund exposure than decrease it. 62% of hedge fund investors expect to increase their allocation in the next 12 months. A further 25% are looking to fund new allocations to hedge funds from other alternatives.
The preference for hedge funds has been growing over time. According to the report, 55% of investors said their view of hedge funds has increased over the past 3-5 years. Among investors with more positive opinions of fixed income
hedge funds, 65% say this is because of strong financial
performance.
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