Global Macro Funds
Global Macro Hedge Funds OverviewThe global macro approach to investing is one of the most popular hedge fund strategies seen today. Global macro fund managers try to make leveraged bets on aspects of the global macro economy. For example, fund managers could place these leveraged bets on currencies, commodities, interest rates, or even equities. As most investors global macro managers would like to minimize downside risk while still offering exceptional returns. Global macro hedge fund managers often have the liberty of having the choice of using any investment instrument in almost any market to produce their returns.
Global macro trades could either be directional or of relative value. In directional trades managers make bets on isolated price movements. For instance, the manager could short the Dollar, long on the Euro, or short on Brazilian Bonds. On the other hand, relative value trades are used to take advantage of assets which were not properly priced. Managers will usually couple assets on both the long and short side to expose these mis- pricings. A usual bet could be a long on US equities versus a short on emerging chinese equities.
The global macro strategy could be executed in any number of markets and because of this fund managers are not as constrained as other fund managers who could have most of their assets invested in one market. Because of this, global macro funds have been able to sometimes avoid the bear markets in one country and take advantage of bull markets in another.
Read more articles like this within my Hedge Fund Strategy Guide.
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