Institutional investor appetite is back for quant funds

The recent CTA performances encourage institutional investors to more closely monitor this type of hedge fund. Thus, according to Preqin, 52% of them wish to increase their exposure to this type of alternative strategy this year (vs 14% last year).

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The recent CTA performances encourage institutional investors to more closely monitor this type of hedge fund. Thus, according to Preqin, 52% of them wish to increase their exposure to this type of alternative strategy this year (vs 14% last year).

The recent CTA performances encourage institutional investors to more closely monitor this type of hedge fund. Thus, according to Preqin, 52% of them wish to increase their exposure to this type of alternative strategy in 2016 (vs 14% last year).

However, their CTA allocation is generally low, "weighing less than 10% of their hedge fund pocket " said Sol Waksman, founder and president of BarclayHedge. Moreover, there are a few thousand institutional investors currently positioned on such funds as shown in the graph below.

Number of institutional investors invested in CTAs Source : Preqin

According to Preqin, there are currently 1 240 CTAs across the world, given the fact that total net launches were negative last year: 84 against 67.

Sol Waksman estimated total assets under management at $ 327 billion at the end of 2015, the majority of these assets are in the hands of a few anglo-saxon fund managers including Winton ($ 34 billion) or Man AHL ($ 17 billion).

Most of institutional investors are funds of hedge funds (44%) investing in a wide range of alternative strategies, ranging from Global Macro to L / S Equity strategies; insurers or banks representing only about a quarter of investors invested in CTAs.

Breakdown of investors for CTAs Source : Preqin

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Sol Waksman, founder and president of BarclayHedge

According to Sol Waksman, CTAs investors tend to favor quantitative funds (nearly 2/3 of Managed Futures) using systematic trend following models, covering several time horizons, i.e short / medium and long term. It is clear that discretionary strategies are much less popular with investors. According to experts, quantitative CTAs offer a more reliable investment approach than discretionary ones.

Due to institutional investor appetite, Preqin estimates that CTA launches should take off in 2016.

CTA launches per year Source : Preqin

RF , April 2016

Article also available in : English EN | français FR

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