Investors surveyed by Tara Capital have boosted their planned allocations to global macro.

In a dramatic turnaround in sentiment, investors surveyed by Tara Capital have boosted their planned allocations to global macro, while confidence remains high for emerging markets hedge funds.

Investor appetite for fixed income has significantly weakened with 33 per cent of respondents planning to reduce allocations.

Convertible has recovered from its dark days of 2004, with one third of respondents planning to increase and not one respondent planning to reduce allocations to this strategy.

Multi strategy funds which invest across a range of opportunities from distressed equities to merger situations polled very well within the event driven sector, with a quarter of investors planning to increase their allocations.

Support for emerging markets funds is strong, with a particularly high level of interest for funds dedicated to the Asian region.

But some investors have turned cautious on Japan as last year was a poor one for the country’s hedge fund sector.

There has been a sharp increase in sentiment for global macro, following last autumn’s reversal, according to Tara.

But, according to Cyril Delamare, Tara chief executive, behind the bullishness for the strategy probably lies an element of overall investor caution.

“A number of the more seasoned macro managers that we speak with have chosen to take a lot of risk off the table in order to be hedged against a significant markets decline,” he said.

Conversely investors have turned bearish on the CTA and managed futures sector. Ninety-two per cent of respondents have either given up or are keeping their allocations to this sector, while no-one is planning an increase.

Of the recently introduced new alternatives, interest in energy trading is very strong, with 33 per cent planning to increase their allocations in the first quarter of 2007.

Separately, all hedge fund strategies, except short selling, delivered positive returns in January according to France-based EDHEC Risk and Asset Management Research Centre.

Most of the positive performers were strongly above their average historical performance, except market neutral, which, with an increase of 0.79 per cent, performed about the same as its historical average performance, and emerging markets (up 0.81 per cent) and global macro (up 0.68 per cent), which performed below their average historical performance.

Like last month, the best-performing strategy was event driven, according to the French business school, with a monthly return of 2.02 per cent.

The lowest return was the -1.07 per cent reported by the short selling strategy which turned negative again after its positive return last month.