Monday 21st August, 2017
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Investors flock to 'macro' hedge funds

Investors flock to 'macro' hedge funds

“Macro” hedge funds are back in favour with in­vestors seeking to take a view on U.S. President Donald Trump’s econom­ic policies, Euro­pean elections, or interest rates, but it is start-up funds rather than es­tablished players which are attract­ing cash.

Some of the main beneficia­ries of the macro revival are manag­ers who cut their teeth at the big macro firms such as Moore Capital Management, Bre­van Howard and Tudor Investment Corp, which made their names for outperformance in 2007-2009.

Eric Siegel, head of hedge funds at Citi Private Bank, said in gener­al that macro strategies are likely to thrive. “With volatility coming back and monetary supply tighten­ing, we believe it could be a great environment for macro managers,” Siegel said.

Macro funds bet on macroeco­nomic trends using currencies, bonds, rates and stock futures. They outperformed the broader industry dur­ing the finan­cial crisis and amassed tens of billions of dollars be­tween 2010 and 2012. But they lost most of those assets between 2013 and 2014 and also in 2016 for a variety of reasons, in­cluding per­formance.

But mac­ro is back in vogue and was the most pop­ular hedge fund strategy among investors in the fourth quar­ter of 2016 and the first two months of this year, according to industry data providers Preqin and eVest­ment.

Moore Capital’s Louis Moore Ba­con, Alan Howard, who co-found­ed Brevan Howard, and Paul Tu­dor Jones of Tudor Investment were among the macro stars after years of delivering double-digit returns.

But during the lean years, when macro was less in favor, they had to cut fees and in some cases staff.