Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Online
June 24, 2010 01:00 AM

Macro hedge funds add $2.5 billion as trades proliferate

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Hedge funds that bet on economic trends are attracting cash at almost double last year's pace as they seek to profit from events such as Europe's sovereign debt crisis and China's decision to let the yuan trade more freely.

    So-called macro funds pulled in $2.5 billion through April, compared with $4 billion in all of 2009, according to researcher BarclayHedge Ltd. of Fairfield, Iowa. The category had the second-highest average returns after fixed-income funds in the past 36 months, even after losing 1.2% in May, data from Chicago-based Hedge Fund Research Inc. show.

    The challenge for investors is selecting from hedge-fund managers with sharply diverging investment views on Europe, where rising budget deficits are roiling the euro; China, which has signaled that it will let its currency gradually appreciate; and emerging markets such as Brazil, where growth is accelerating. Macro funds wager on such trends by trading currencies, bonds, stocks and commodities.

    “There is a lot of uncertainty in global markets at the moment, so we are adding short-term trading funds,” said Jose Galeano, chief investment officer at 3A, a unit of Geneva-based Banque Syz & Co. that has invested $2.2 billion in hedge funds for clients.

    Hedge funds attracted $23.7 billion through April, bringing assets to an 18-month high of $1.65 trillion, according to BarclayHedge. Deposits into macro funds, which oversee $94.9 billion, equaled 2.7% of assets.

    Most popular funds

    That topped bigger categories including distressed securities, emerging markets and fixed income, which each had inflows of 1.6% of assets. The most popular major categories this year are funds that bet on corporate events and those that bet mostly on rising stock prices, both with net deposits of 3.4%, BarclayHedge said.

    Macro managers often post a broader range of returns than rivals because they trade in more markets. The range has been even wider this year because of volatile price swings and the diversity of bets on the direction of global economies.

    Returns at Peter Thiel's Clarium Capital Management LLC fell as much as much as 5.5% in the week ending June 11, leaving a loss of 6.5% this year. Clarium has been wagering that the U.S. is entering a deflationary period, which would lead to falling stock prices and a stronger dollar. Armel Leslie, a spokesman for the San Francisco-based firm, declined to comment.

    No consensus

    Colm O'Shea, who runs the $5 billion Comac Capital LLP in London, saw his Comac Global Macro Fund climb 6.6% this year through June 4. His returns were boosted by bets against the euro.

    Alan Howard, founder of London-based Brevan Howard Asset Management LLP, said at the start of the year that he'd never seen a time when two diametrically opposed forecasts – a deflationary bust and an inflationary spiral – could be argued with equal conviction. Almost six months later, there's still little consensus on such macro-economic issues.

    Brevan's BH Macro Ltd. fund has climbed about 1.15% this year, according to data compiled by Bloomberg. The firm's BH Global Ltd. fund has returned 9.3%.

    Hugh Hendry, chief investment officer and co-founder of London-based Eclectica Asset Management, whose fund has climbed 10% this year through May, is forecasting the euro is “finished” as Germany may leave the currency shared by 16 European nations.

    “The Germans will let Europe go,” Mr. Hendry said at the GAIM International hedge-fund conference in Monaco last week. “They will say, ‘We are cutting off ties here and you are on your own. We are German, we are rich and we will stay rich.'”

    The euro has plunged about 14% this year to $1.22 amid concern that Greece and other European nations will default on their debt.

    Fortress's view

    Michael Novogratz, principal of New York-based Fortress Investment Group LLC, whose Drawbridge Global Macro Fund climbed 2.8% this year through June 4, disagrees.

    “If the Greeks make an effort to get their house in order, they will be bailed out,” he said at the conference. The euro could trade at parity to the dollar, or even slip lower, at which point European policy makers will come together and buy sovereign debt to support the currency, he said. Fortress had $3.3 billion in macro funds as of March 31, according to regulatory filings.

    Mr. Hendry said he's betting China's “credit bubble” will burst, causing its economy to contract and triggering a global crisis.

    “They have been producing GDP growth, but I don't see the wealth,” he said. “And the absence of wealth makes them vulnerable.”

    Mr. Hendry's firm has bought options on 20 companies in international markets that will profit from “a dramatic collapse” of China's growth that's been fueled by an unprecedented lending boom.

    Mr. Novogratz said he isn't so pessimistic. He sees Chinese economic growth slowing as the country shifts to building low- end residential properties from high-end buildings.

    “I don't think they will be able to make the hand-off graciously. In the short term I expect commodity prices to be lower and China's growth to slow, but I don't expect a collapse,” he said.

    Recommended for You
    martin_luther_king_day_generic_i.jpg
    No P&I Daily on Martin Luther King Jr. Day
    Closed sign
    No P&I Daily over the holidays
    Happy_Thanksgiving_i.jpg
    No P&I Daily for Thanksgiving holiday
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing