Discretionary macro is now the most favoured strategy among European hedge fund investors, according to Credit Suisse’s annual survey.

The strategy has endured mixed recent fortunes, with firms including Brevan Howard returning to form, but others, including Rubicon Fund Management and Nektar, closing.

Discretionary macro was also the top pick in Asia, while US investors opted for equity-based strategies.

The survey, which quizzed more than 300 institutional investors, found that clients are maintaining their hedge fund exposure, but increasingly favour a greater degree of customisation in their investments.

Investors are increasingly recycling their redemptions back into hedge fund managers running different strategies, rather than withdrawing from the industry altogether, with 89% of those polled set to recycle redeemed capital into hedge funds, up from 82% in 2016.

Despite disappointing performance in 2018, more than half of those surveyed (54%) intend to maintain their exposure to hedge funds this year, with well over a third (38%) set to increase their investments. Just 8% said they plan to cut exposure.

Demand among investors for more bespoke and customised products continues to surge. In the past 12-18 months, 58% of allocations were directed to alternative structures – chiefly bespoke managed accounts and co-investments.

That, in turn, is leading to more “holistic partnerships” with a greater concentration of hedge fund managers, the report said.  The average number of managers in a portfolio (31) is down 35% from 2009, further reflecting this portfolio consolidation.

“Investors are staying the course on their hedge fund exposure,” Melissa Toma, co-head of Credit Suisse Capital Services Americas, said in a statement.  “It is important to highlight they are focused on re-underwriting their existing portfolios; reducing the overall number of positions and sizing up where they have conviction.”

The report, titled Trimming the Sails, surveyed 311 institutional investors, together representing some $1.12 trillion in hedge fund investments, with close to a third of respondents based in Emea. Participants spanned a range of investor types, including pensions, endowments, foundations, consultants, private banks, family offices, and funds of hedge funds.

Macro funds now top pick for European HF investors on EuroHedge.