- Kurdyavko’s EM Credit Alpha strategy, which she manages with Anthony Kettle, returned 2.7% in January after a 21.1% gain in 2024
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Emerging market debt specialist Polina Kurdyavko predicts a “golden age” for fixed-income hedge funds, as opportunities increase and institutional investors grow more bullish.
Institutions increasingly view hedge funds as a means to increase returns from fixed-income markets, according to research commissioned by RBC Global Asset Management.
More than half (55%) of respondents had grown more positive about hedge funds (versus 15% more negative) and 36% plan fresh inflows. An additional quarter said they would fund new inflows by decreasing their allocations to other alternative strategies.
Almost two-thirds of global institutional investors (63%) expect annual returns of 10% or higher from fixed income hedge funds. Less than half (47%) said their holdings had recently accomplished this.
“We believe we are in the golden age for fixed income hedge funds,” said Polina Kurdyavko, a hedge fund manager and head of BlueBay Emerging Market Debt, part of RBC.
“Geopolitical tensions and interest rate policies continue to be top of mind for investors, and the resulting uncertainty is likely to create volatility in the markets.
Kurdyavko’s EM Credit Alpha strategy, which she manages with Anthony Kettle, returned 2.7% in January after a 21.1% gain in 2024, according to a source familiar with the returns. It has now annualised 12.5% over five years.
BlueBay manages $2.4bn in its hedge fund range.
“We believe funds that can play the markets from both the long and short side are particularly well placed to capitalise on the mis-pricings and inefficiencies created by this volatility to deliver positive returns, regardless of the market direction.”
We believe we are in the golden age for fixed income hedge funds
Polina Kurdyavko, head of BlueBay Emerging Market Debt
In the report’s key findings:
- Geopolitical tensions (60%), interest rate policies (58%) and highly volatile equity markets (48%) were identified by investors as the three main factors they think will impact fixed income in the next 3-5 years.
- Asset class (69%) and predictability/volatility of returns (59%) are the two priority factors for investors when assessing potential allocations investments into fixed income hedge funds.
- 61% of institutional investors plan to evolve their exposure to hedge funds and 59% to private credit (e.g. specialist situations, securitised credit, distressed debt) over the next 12 months.