Hedge fund managers and their investors could be rewarded with better returns in 2020 as volatility rises across global markets, fueled by uncertainty over factors including the impeachment trial of President Donald Trump, Brexit, trade wars, the outcome of the U.S. presidential election and less market liquidity.
These risk catalysts abounded in 2019 and the question going forward is which of these will pop up again in 2020 and when, said Kenneth J. Heinz, president of hedge fund index provider Hedge Fund Research Inc., Chicago, in an interview.
"These are highly polarizing, volatile issues. Global markets will price in the impacts of these possibilities and hedge fund managers will analyze all possible scenarios to prepare their portfolios,"
Executives at global macro specialist Brevan Howard Asset Management LLP, London, expect that "with equity markets at record highs … diversifying strategies such as macro (will) continue to be in demand" as investors face "a range of macro crosscurrents," said CEO Aron Landy in an email response to questions about the firm's 2020 investment outlook.
"Geopolitical tensions have been increasing, fundamental data on growth and inflation have generally been weak and there's significant uncertainty about the future path of monetary and fiscal policy," Mr. Landy said.
Brevan Howard managed $7.2 billion as of Oct. 31.