The year 2022 has been a challenging one for most investors — “including hedge funds,” according to Marko Kolanovic, chief global market strategist and co-head of global research at JPMorgan Chase & Co.
Throughout the last ten months, hedge fund managers have had to navigate high levels of volatility, as well as macroeconomic and geopolitical risks, Kolanovic said. “The most important one is the surge of inflation and related response of central banks and bond markets,” he added. “Also critically important was the geopolitical escalation in Europe and its impact on global growth and the commodity and bond markets.”
Equity investors were “profoundly impacted” by those macro developments, he said.
“No one could ignore macro,” confirmed Katy Huberty, global director of research at Morgan Stanley. “And when macro is the dominant driver of risk assets, it’s harder to generate alpha. But our strategists were recommending relative value strategies across almost every asset class, which clearly plays to these clients’ strengths.”
Among the winners of the hedge fund industry have been platform multi-strategy funds, which have seen impressive growth, Huberty said. “And we have been growing our relationships with them accordingly,” she said. She credits Morgan Stanley’s long-term strategic commitment to investing in its people, data, and technology platform.
“Our research team’s time spent with our hedge fund clients is higher this year versus last year — but importantly, that greater level of engagement has been largely consistent across our overall client base,” she said.
It appears to have been time well spent: Hedge fund managers have once again crowned Morgan Stanley as Wall Street’s No. 1 research provider in Institutional Investor’s 2022 All-America Research Team: Hedge Fund Cut.