MINNEAPOLIS, Feb. 25,
2025 /PRNewswire/ - Global institutional investors
are feeling bullish about the return potential from fixed income
hedge funds, according to research commissioned by RBC Global 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.
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
from asset owners across the US, Europe, and Asia managing assets of between US$5 billion and more than US$100 billion, the report found several factors
underpinning the demand for fixed income hedge fund strategies.
These include historically strong financial performance (65%) –
rising to 84% in Asia and 70% in
the US – evolving fee structures (48%) and greater levels of market
liquidity (45%).
In November 2024, the inaugural
report entitled 'Shifting Strategies: How institutions are
embracing fixed income hedge funds' surveyed
institutional investors' perceptions and intentions regarding
alternative investment strategies including private credit, total
return, and multi-strategy credit.
In the case of hedge funds, 55% reported that their opinion of
these strategies has become more positive. When asked about plans
for their hedge fund allocation in the year ahead, more than a
third (36%) stated that they plan to fund this through new inflows
while a quarter (25%) plan to decrease their allocations to other
alternative strategies.
Commenting on the findings, Polina Kurdyavko, a hedge fund
manager and head of BlueBay Emerging Market Debt, at RBC Global
Asset Management, said:
"We believe we are in the golden age for fixed income hedge
funds. Geopolitical tensions and interest rate policies continue to
be top of mind for investors, and the resulting uncertainty is
likely to create volatility in the markets. We believe funds that
can play the markets from both the long and short side are
particularly well placed to capitalise on the mis-pricings and
inefficiencies created by this volatility to deliver positive
returns, regardless of the market direction."
Other highlights include:
- Geopolitical tensions (60%), interest rate policies (58%) and
highly volatile equity markets (48%) were identified by investors
as the three main factors they think will impact fixed income in
the next 3-5 years.
- Asset class (69%) and predictability/volatility of returns
(59%) are the two priority factors for investors when assessing
potential allocations investments into fixed income hedge
funds.
- 42% of investors plan to consider higher yielding assets
because of macroeconomic expectations for the year ahead, with 48%
expecting target returns of between 10%-19% from their
managers.
- 61% of institutional investors plan to evolve their exposure to
hedge funds and 59% to private credit (e.g. specialist situations,
securitised credit, distressed debt) over the next 12 months.
For more detail about the survey findings, please follow this
link: http://institutional.rbcgam.com/alts-survey.
About RBC
Royal Bank of Canada is a global financial institution with
a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 98,000+ employees who
leverage their imaginations and insights to bring our vision,
values and strategy to life so we can help our clients thrive and
communities prosper. As Canada's
biggest bank and one of the largest in the world, based on market
capitalization, we have a diversified business model with a focus
on innovation and providing exceptional experiences to our more
than 18 million clients in Canada,
the U.S. and 27 other countries. Learn more at rbc.com.
We are proud to support a broad range of community initiatives
through donations, community investments and employee volunteer
activities. See how at rbc.com/peopleandplanet.
About RBC Global Asset Management
RBC Global Asset
Management (RBC GAM) is the asset management division of Royal Bank
of Canada (RBC). RBC GAM is a
provider of global investment management services and solutions to
institutional, high-net-worth and individual investors through
separate accounts, pooled funds, mutual funds, hedge funds,
exchange-traded funds and specialty investment strategies. RBC
Funds, BlueBay Funds, PH&N Funds and RBC ETFs are offered by
RBC Global Asset Management Inc. (RBC GAM Inc.) and distributed
through authorized dealers in Canada. The RBC GAM group of companies, which
includes RBC GAM Inc. (including PH&N Institutional) and RBC
Indigo Asset Management Inc., manage approximately $680 billion in assets (CAD) and have
approximately 1,600 employees located across Canada, the United
States, Europe and
Asia.
Contact
Fatima
Kasraie, ffarhatkasraie@bluebay.com
Tony Catinella,
tony.catinella@rbc.com
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SOURCE RBC Global Asset Management (U.S.)
