Bloomberg – BlackRock Inc.’s global macro fund, the world’s second-best performer over two years among hedge funds that invest based on economic trends, is betting against this month’s equities rally and buying bonds as a recovery from the worst credit crisis since the Great Depression falters.

BlackRock’s A$216 million ($152 million) Asset Allocation Alpha Fund returned 41 percent in 2008, when hedge funds around the world lost a record 19 percent on average. The fund is short U.S. and Australian equities, expecting them to decline, and long U.S., German, Australian, Canadian, and U.K. bonds, said its manager David Hudson.

“The risk is that the economic recovery disappoints in the second half and that equity markets need to revisit their lows in the next few months and maybe go through them,” Sydney-based Hudson said in an interview March 20.

The MSCI World Index, which tumbled 42 percent last year, has rallied 21 percent since March 9, boosted in part by the U.S. Federal Reserve’s decision to pump money into the economy to get credit flowing. Hudson profited from the declines last year by betting against equities.

BlackRock, which oversees $1.3 trillion, is the biggest publicly traded asset manager in the U.S. Over a third of total assets are managed on behalf of non-U.S. investors, and nearly one-third of its employees are outside the U.S.

Read Complete Article

Tags: asset-allocation, asset-manager, australian equities, blackrock inc, bloomberg, bonds, credit-crisis, david hudson, declines, economic recovery, economic trends, federal-reserve, global macro, great depression, interview march, lows, msci-world-index, trillion