Global macro

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The 2022 Russian invasion of Ukraine destabilized global energy markets and created investment opportunities as Russia was a key oil and gas supplier to much of Europe. RF NG pipestoEU.gif
The 2022 Russian invasion of Ukraine destabilized global energy markets and created investment opportunities as Russia was a key oil and gas supplier to much of Europe.

Global macro is an investment strategy that leverages macroeconomic and geopolitical data to analyze and predict moves in financial markets. [3] [4] Large-scale or "macro" political and economic events can disproportionately impact certain sectors, such as the energy, commodity, and currency markets, over others. The strategy typically employs forecasts and analysis of interest rate trends, international trade and payments, political changes, government policies, international relations, and other broad systemic factors.

Contents

History

As a strategy, global macro formalized in the late-1960s around commodity trading. [4] Large-scale macro events pushed market prices of both soft (cocoa, fruit and sugar) and hard (gold, silver, and copper) commodities to move in recognizable patterns. [5] In the 1970s, interest rate modeling was used to predict moves in foreign currency markets as well as in sovereign debt. [4] Hedge fund managers such as Paul Tudor Jones used large-scale demographic analysis to predict the equity market collapse of 1987 after comparing the market conditions of a similar crash in 1929. [4] The 1990s saw the rise of global macro volatility trading which used geopolitical instability in both developed and developing nations to place directional bets on market movements. [4] In 1992, hedge fund manager George Soros' profitable sale of the pound sterling prior to the European Exchange Rate Mechanism debacle yielding him a profit of $1 billion in a single day. [6] [7] : 225  In 1994, investment management firms began factoring in macro data into a portfolios' risk profile. [5] Three years later in 1997, the Global Economic Policy Uncertainty (GEPU) Index was created to measure three key macro variables: economy, policy, and uncertainty (volatility). [5] During the 2010s, quantitative investment funds dedicated resources to global macro strategies due to the complexity involved with analyzing large amounts of dynamic economic and political data. [4] Modern technology including AI has been used to sort through data and in the execution of trades involving certain sectors, such as the energy, commodity, and currency markets, among others.

Types

Due to the broad mandate of global macro, it has been described by DoubleLine Capital as a "go anywhere, do anything" strategy. [8] [9]

Funds

A list of global macro investment funds include:

See also

Related Research Articles

A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as short selling, leverage, and derivatives. Financial regulators generally restrict hedge fund marketing to institutional investors, high net worth individuals, and accredited investors.

<span class="mw-page-title-main">Hedge (finance)</span> Concept in investing

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<span class="mw-page-title-main">Paul Tudor Jones</span> American hedge fund manager and investor

Paul Tudor Jones II is an American billionaire hedge fund manager, conservationist and philanthropist. In 1980, he founded his hedge fund, Tudor Investment Corporation, an asset management firm headquartered in Stamford, Connecticut. Eight years later he founded the Robin Hood Foundation, which focuses on poverty reduction. As of April 2022, his net worth was estimated at US$7.3 billion.

<span class="mw-page-title-main">Financial risk</span> Any of various types of risk associated with financing

Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent.

<span class="mw-page-title-main">Commodities Corporation</span>

Commodities Corporation was a financial services company, based in Princeton, New Jersey that traded actively across various commodities. The firm was noted as one of the leading commodity and futures trading firms. CC is credited for launching the careers of many notable hedge fund investors and for its influence on global macro investing.

The following outline is provided as an overview of and topical guide to finance:

Brevan Howard is a European hedge fund management company based in Jersey with its funds domiciled in the Cayman Islands. Brevan Howard was founded in 2002 by Alan Howard, alongside four other co-founders including Chris Rokos, and is widely considered to be one of the top global macro hedge funds.

Moore Capital Management LP (MCM) is a New York-based, global investment management firm headquartered in New York, New York. In September 2018, MCM had $10.2 billion in total assets under management.

<span class="mw-page-title-main">Winton Group</span>

Winton Group, Ltd is a British investment management firm founded by David Harding. In the United States, Winton is registered with the Securities and Exchange Commission as an investment advisor and with the Commodity Futures Trading Commission as a CTA, and is authorised by the Financial Conduct Authority in the UK. The company trades on more than 100 global futures markets in a wide variety of asset classes and on global equity markets. The firm was launched with $1.6 million in 1997, reached a peak of $28.5 billion in assets under advisement, before dropping to $7.3 billion by late 2020. Winton Group has six offices around the world: London, New York, Hong Kong, Shanghai, Sydney, and Abu Dhabi.

Systematic trading is a way of defining trade goals, risk controls and rules that can make investment and trading decisions in a methodical way.

A commodity trading advisor (CTA) is US financial regulatory term for an individual or organization who is retained by a fund or individual client to provide advice and services related to trading in futures contracts, commodity options and/or swaps. They are responsible for the trading within managed futures accounts. The definition of CTA may also apply to investment advisors for hedge funds and private funds including mutual funds and exchange-traded funds in certain cases. CTAs are generally regulated by the United States federal government through registration with the Commodity Futures Trading Commission (CFTC) and membership of the National Futures Association (NFA).

A managed futures account (MFA) or managed futures fund (MFF) is a type of alternative investment in the US in which trading in the futures markets is managed by another person or entity, rather than the fund's owner. Managed futures accounts include, but are not limited to, commodity pools. These funds are operated by commodity trading advisors (CTAs) or commodity pool operators (CPOs), who are generally regulated in the United States by the Commodity Futures Trading Commission and the National Futures Association. As of June 2016, the assets under management held by managed futures accounts totaled $340 billion.

<span class="mw-page-title-main">Brandywine Asset Management</span>

Brandywine Asset Management, Inc. is an American investment management firm founded and managed by Michael Dever. The firm is registered as a commodity trading advisor.

Steven Edward Drobny is an American hedge fund advisor and published author. He is the founder of Clocktower Group, a consulting and investment advisory business focused on fundamental discretionary global macro and commodity hedge fund strategies. Drobny is the author of The Invisible Hands: Top Hedge Funds on Bubbles, Crashes and Rethinking Real Money and Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets

<span class="mw-page-title-main">Cantab Capital Partners</span>

Cantab Capital Partners is a hedge fund based in Cambridge, England, co-founded by Dr. Ewan Kirk and Erich Schlaikjer. Cantab operates quantitative funds using computer models to drive investment decisions. As of Feb 2015 Cantab had $4.5 billion in assets under management, after launching with $30 million in 2006. The firm takes its name from Cantabrigia, the medieval Latin name for Cambridge. It is regulated in the UK by the Financial Conduct Authority. Cantab Capital Partners was acquired by GAM in 2016 and is since part of GAM Systematic.

<span class="mw-page-title-main">Quality Capital Management</span>

Quality Capital Management Ltd is a UK-based hedge fund specialising in managed futures. The company was founded by Aref Karim in 1995 and its headquarters is in Weybridge, Elmbridge, Surrey, England.

<span class="mw-page-title-main">Quantedge</span>

Quantedge Capital is an alternative investment asset manager based in Singapore and New York City. It manages over US$2 billion under its flagship Quantedge Global Fund primarily on behalf of high-net-worth individuals, family offices and institutions.

<span class="mw-page-title-main">Aspect Capital</span> Investment management company based in London

Aspect Capital is a London-based investment manager that applies a systematic and quantitative approach to investment management. According to the Financial Times, Aspect uses "technology and complex mathematical models to power computers that trade the world's markets around the clock". Aspect manages USD6.6bn.

References

  1. ↑ "The Russian invasion of Ukraine and China's energy markets". Oxford Institute for Energy Studies. Retrieved 2023-07-10.
  2. ↑ Geman, Ben (January 23, 2023). "Ukraine war upended energy markets forever". Axios.
  3. ↑ "Macro Strategy Is Dead. Long Live Global Macro". thehedgefundjournal.com. Retrieved 2023-07-10.
  4. 1 2 3 4 5 6 Gliner, Greg (2014). Global Macro Trading (1st ed.). Bloomberg Financial. ISBN   9781118362426.
  5. 1 2 3 Smigel, Leo (2022). A Brief History of Global Macro.
  6. ↑ Drobny, Steven (December 2013). Inside the House of Money: Top Hedge Fund Traders in the Global Markets. p. 368. ISBN   978-1-118-84328-4 . Retrieved 31 December 2015.{{cite book}}: |work= ignored (help)| Foreword by Niall Ferguson
  7. ↑ Drobny, Steven (2006). Inside the House of Money . Wiley. ISBN   0-471-79447-3.
  8. ↑ Strategy Matrix
  9. ↑ "Opalesque Roundtable", Opaluesque, San Francisco, 2010, retrieved 31 December 2015
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