Reuters.uk – Investors are raising their exposure to global macro hedge funds because of their potential to make money in volatile markets, but a dearth of talent in the sector means that returnscould disappoint.<\/p>\n
Global macro hedge funds take directional bets in stock, bond, currency and commodity markets using economic trends.<\/p>\n
For these funds, opportunities to make money should be many and varied given expectations of a liquidity withdrawal, which could create volatility and trigger new trends.<\/p>\n
Volatility in commodity and emerging markets, forecasts of a declining dollar and rising U.S. Treasury bond yields are all potential opportunities for these money managers.<\/p>\n
But the real skill in global macro is timing and risk management — knowing when to take profits or cut losses — because few things move in a straight line. Inevitably there are corrections and turning points are even harder to pinpoint.<\/p>\n
“The thing about global macro is you have to be a very good trader,” said Gavin Rankin, head of investment analysis in Europe at Citigroup Private Bank. “Identifying the trend, timing of trades and risk management are crucial.”<\/p>\n