Learning the lessons of macro managers

Global macro hedge funds are attracting investors and fund selectors alike as expectations grow for the strategy’s performance in 2012.

Global macro hedge funds are increasingly in the spotlight due to their reputation for performing in adverse market conditions.

A recent Lipper report found that in 2011 “funds with the ability to switch asset allocation across the ­spectrum and with an absolute return focus” attracted €12bn in inflows – a remarkable feat given the crushing redemptions (€69.3bn) seen in most European funds that year.

Don Steinbrugge, founder of Agecroft Partners, highlighted that equity hedge assets had fallen 21% – from $684bn in 2007 to $539bn in 2011. Conversely, global macro and computer-driven styles had grown 50%, from $288bn to $434bn.

Europe’s hedge fund industry has taken note: last month, ­Phillippe Gougenheim, former head of hedge funds at Unigestion, launched a global macro hedge fund outfit.

UK-based Stenham Asset Management recently launched Stenham Helix, a liquid macro fund of hedge funds, to respond to growing interest in the strategy despite the HFRX Global Macro/CTA Index’s poor 2011 performance.

According to its ­investment director Javier Uribarren (pictured), when markets suffer, allocations to most hedge fund strategies dry up. The sole exception is macro hedge funds, which have ­actually benefited from falling interest in hedge funds since 2008.

He believes global macro hedge funds will continue drawing investors as the turbulence witnessed last year is here to stay. “Most of the ­measures taken over the past few years to limit a potential crisis have, in the long term, fuelled one. It is difficult to imagine how short-term volatility could go away,” he says.


The start of 2012 has seen markets stabilise and tense negotiations over Greece’s debt have not triggered the same volatility in equity and bond prices seen last December.

Despite “strong rallies, overall choppiness will persist,” Uribarren believes. In such an environment, “understanding every asset class is absolutely crucial,” he says.

This is what prompts his ­confidence that 2012 could be a bumper year for macro managers, known for their vast knowledge of asset classes, markets and regions.

Last year, there was a dearth of opportunities in equities and credit. This year, the opportunities are ­“outstanding,” he says, adding: “If anyone can capture these opportunities, it will be macro managers.”

He is confident more specialised macro managers with a focus on bonds, credit or equities will stand out from the rest.

Structure is also important. The fund managers most likely to succeed will adopt an institutional structure, ensuring the fund is well managed and risk management is exemplary.

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