Reuters.uk – Investors are raising their exposure to global macro hedge funds because of their potential to make money in volatile markets, but a dearth of talent in the sector means that returnscould disappoint.
Global macro hedge funds take directional bets in stock, bond, currency and commodity markets using economic trends.
For these funds, opportunities to make money should be many and varied given expectations of a liquidity withdrawal, which could create volatility and trigger new trends.
Volatility in commodity and emerging markets, forecasts of a declining dollar and rising U.S. Treasury bond yields are all potential opportunities for these money managers.
But the real skill in global macro is timing and risk management — knowing when to take profits or cut losses — because few things move in a straight line. Inevitably there are corrections and turning points are even harder to pinpoint.
“The thing about global macro is you have to be a very good trader,” said Gavin Rankin, head of investment analysis in Europe at Citigroup Private Bank. “Identifying the trend, timing of trades and risk management are crucial.”
