Kirstie Brewer

18/01/2012 Author: Kirstie Brewer

Ongoing volatility makes pensions turn to macro

With steely resolve, the $148bn California State Teachers Retirement System (CalSTRS) has set itself the challenge of making a $10bn profit in 2012. The planned springboard for meeting this ambitious target? A new global macro hedge fund portfolio.

It’s not the only one. The New Mexico State Investment Council (NMSIC), which oversees the state's $14.4bn permanent endowment funds, is also kick-starting 2012 by boosting its allocation to the global macro arena; and others are doing likewise.

While volatility continues to roil the markets and shows no sign of abating, institutional interest in global macro hedge funds is widespread and growing, with reports of sizeable cheques being cut in the last few months and a flurry of new launches on the cards, including a new fund of hedge funds from the $2.7bn Stenham Asset Management.

“We are interested in global macro as we view it as a diversifier from equities – we are starting to begin training and education sessions with both our local authority and corporate pension fund clients,” says Alison Clark, a manager research analyst at Hymans Robertson, suggesting the strategy could be on the radar for some time yet.

“There is no quick fix for the current macro-economic issues, and we expect the opportunity to persist in the medium term." adds Guy Saintfiet, UK head of liquid alternatives at Aon Hewitt.

Investors, whatever the weather, continue to have three main demands: higher liquidity, lower beta and higher alpha, and so while global macro may have been down 3.6% last year, according to Hedge Fund Research, it appears to be making best sense of the current market chaos.

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