Global Macro Surges Ahead

Terry Flanagan

The hedge fund strategy that assesses global geopolitical risks and opportunities will surge ahead in 2012, some say.

The emerging markets may have yielded investors decent returns in light of the struggling developed markets’ economic recoveries since the financial crisis of 2008. For hedge funds, the strategy forging ahead may be global macro, which takes a holistic approach to investing abroad.

“Global Macro managers make money by going beyond the cold numbers and understanding how a multitude of geopolitical and other factors can influence markets,” said Amanda Rodrigues-Cheung, event director at the Global Alternative Investment Management (GAIM).

GAIM is a recognized industry conference for hedge fund professionals, and operated under British event, conference and information provider, Informa PLC.

While global inflation may be on the rise, along with the debt crises of Europe and the U.S., “may be priced in to the markets,” Rodrigues-Cheung noted that it is up to global macro managers to assess if global events reflect realistic prices, and “where they see discrepancies they will invest accordingly.”

Institutions first began to embrace global macro as a strategy in 2007, according to Rodrigues-Cheung, and the strategy’s returns in 2009 during the U.S. down market corroborated institutional support of global macro investing.

“While the institutional investor community did not historically embrace macro as a strategy, that all changed with the advent of the risk-on, risk-off environment in 2007,” Rodrigues-Cheung said. She noted that 2009 showed global macro managers had uncorrelated returns and “over time did well in risk-averse environments,” such as a time when institutions were concerned about their liquidity.

Rodrigues-Cheung told Markets Media that global macro managers exercise “relatively liquid” strategies versus that of other hedge funds

“The fact is that investors will continue to look for returns and opportunities regardless of their outlook and, in this environment, Global Macro is especially attractive,” she said.

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