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The market fluctuations in the first half of 2022 have clearly shown investors how important portfolio diversification is. Hedge funds with a global macro approach in particular were able to make a contribution to this in recent months. While equity markets worldwide plummeted in the first six months of 2022, global macro hedge funds bucked the negative trend and achieved very good gains. Global Macro Trading follows a classic top-down approach: The fund management analyzes the economic data of countries or sectors - also taking into account political developments - and derives possible trends from this. Investments are preferably made in liquid instruments worldwide, such as stock indices, futures on currencies, commodities and government bonds.
"Many hedge fund managers, who base their decisions on fundamental data, recognized very early on that high inflation and the increase in geopolitical risks would hit the markets hard and changed their risk allocation in time," says Marcus Storr, Head of Alternative Investments FERI Trust GmbH. Due to the fluctuations on the stock market, hedge fund strategies on the short side have performed better than they have in many years: "With the possibility of taking short positions, hedge funds have an effective tool at their disposal to reduce the market dependency of their portfolios," adds Storr.
Hedge funds that bet on macroeconomic trends use two different models to do so. The classic discretionary approach relies on the skills of individual portfolio managers and their analytical teams. Decisions can be made on a discretionary basis. Experience shows that the managers' gut feeling can also be a success factor. On the other hand, computer-based trading is becoming increasingly important. The so-called systematic global macro funds strictly follow rules set by algorithms. They consistently base their allocation decisions on ongoing market trends and often operate with strong leverage and high trading volumes. Systematic global macro strategies returned just under 10 percent in the first quarter of 2022, when markets were caught off guard by the outbreak of war in Ukraine and went on a roller coaster ride, and just under 5 percent again in the second quarter. "Already in the past, global macro hedge funds were among the winners in volatile market phases due to their low correlation. Professional investors who want to stabilize their portfolio in a difficult market environment should therefore take a closer look at this strategy," says Storr.