Consider Commodity Trading Advisor funds, or CTAs, that trade a wide range of futures and indexes and make money by identifying trends in underlying markets. Sustained directional moves are equally important. Last year, Singapore kept up with the Fed better than all its Asian peers and its currency is thus thought to be overbought. Macro funds can also make money when the biggest central banks are not in sync with each other on monetary policy.įor instance, a short on the Singapore dollar, especially against the neighbouring ringgit, is gaining traction after the Monetary Authority of Singapore signalled it had finished its tightening cycle. Once again, traders have a very different view on inflation. This year, the game of chicken with the Federal Reserve (Fed) continues, except that this time, investors are betting the US central bank will slash interest rates as early as the second half, while none of the officials are pencilling in any cuts and are hammering a different message. They made the correct call that policymakers were behind the curve on inflation, and that they would eventually turn hawkish and acknowledge that price increases were not transitory.įor that, they gained from rising yields – such as rates on US two-year debt soaring from 0.78% to 4.43%.Ī surprise change by the Bank of Japan to its yield curve control policy in December handed another win to those bond bears. Last year, they profited from challenging the authority of the biggest central banks. They’ve certainly got a few interesting investment themes and selling points. Macro funds may well have another good year ahead, judging by the global landscape in 2023. Despite big losses, they are still launching new offerings and drawing in billion-dollar checks. Nonetheless, the big question remains whether macro funds can repeat their outperformance and reclaim the industry crown.Ĭrossover funds, popular with investors, are down but not out. Looking at allocation plans for 2023 among all the trading strategies, investors favoured macro the most, according to the latest Preqin survey.įor their 2023 allocation, investors are most keen on macro funds. With the world in disarray, macro funds are back in fashion. When global markets were dominated and becalmed by central banks’ bond buying programs, they no longer offered much value-add. This report card was sorely needed, because macro managers had lost quite a bit of shine since the collapse of Lehman Brothers Holdings Inc. Tiger Global Management, the most prominent in that category, lost 56%. Meanwhile, the performance of crossover hedge funds, which had branched into the venture capital world to buy the hottest tech startups, was disastrous. The classic 60:40 model – a portfolio with 60% in stocks and 40% in bonds – had its worst year since 2008. It was all the more remarkable because nothing else worked. On average, they notched a 12.2% return versus minus 0.7% for the broader industry. MACRO hedge funds, which look at economic trends and take advantage of dislocations across asset classes, had a banner year in 2022.
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