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Alternative Market Briefing

Global investors' appetite for fixed-income hedge funds surges

Tuesday, March 04, 2025

Laxman Pai, Opalesque Asia:

Global institutional investors are bullish about the return potential from fixed-income hedge funds, revealed a study.

According to research commissioned by RBC BlueBay Asset Management, two-thirds of global institutional investors (63%) expect annual returns of 10% or higher from fixed-income hedge funds. This optimism is driven by strong financial performance, evolving fee structures, and greater levels of market liquidity.

Currently, 60% are invested in hedge funds, and of these, 84% are allocated to fixed-income strategies.

The report entitled "Shifting Strategies: How Institutions are Embracing Fixed Income Hedge Funds" surveys institutional investors' perceptions and intentions regarding alternative investment strategies including private credit, total return, and multi-strategy credit.

However, in contrast to investors' expectations looking forward, fewer than half (47%) of fixed-income hedge fund investors surveyed reported having earned double-digit returns. Fifty-two percent of investors said their annual fixed-income hedge fund performance ranged between 5-9%.

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.

Comprising responses from 450 senior investment decision-makers ......................

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