Global macro managers were boosted by net inflows for a seventh straight month in December, making it the most sought-after strategy in Europe last year.
European macro funds tracked by HFM Data grew almost 2% as a result of positive fund flows last month as subscription requests from earlier in the year finally hit portfolios. The inflows came as performance losses shaved 0.6% from the strategy, despite gains for some big names (see macro strategy piece).
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Investors have continued to back macro managers to thrive amid more volatile markets, with the ongoing reduction in quantitative easing by central banks and upward movement in interest rates tipped to create more trading opportunities.
Only European equity funds proved more popular with investors last month, the strategy grouping in Europe growing 2.2% as net inflows landed in portfolios. Fixed income and emerging market debt were the other two of only four strategies in Europe which attracted net inflows.
Volatility funds saw the sharpest reduction in assets, the grouping in Europe shrinking by 5.5% as investors pulled their cash after booking gains on vol spikes earlier in the year. Currency funds shrank by 3.2%, even as the strategy was bolstered 3.5% by strong performance in December, which cancelled out the asset movement.
The other strategy to take a hit of more than 3% on outflows was commodities. Pierre Andurand’s loss last year summed up a difficult year for commodities funds, as volatile markets and a falling oil price prevented big gains. Oil bull Andurand lost 19.9% in his flagship, its first annual loss since it began to trade in 2013. The European carbon trade was a winning trade in energy and commodities last year, but few capitalised on it (see Top 50).
Overall the European hedge fund sector shrank 0.3% in December due to performance losses in most strategies. The impact of investor flows movement was almost flat, despite most strategies seeing outflows. Investors pulled most from the smaller, more niche strategies such as volatility trading, currency and commodities, skewing the data.
Flows watch: Macro continues to tempt investors on EuroHedge.