Investing in Hedge Funds, Revised and Updated Edition

CHAPTER 10

Macro Investing

MACRO STRATEGIES attempt to identify extreme price valuations in stock markets, fixed-income markets, interest rates, currencies, and commodities and make bets on the anticipated price movements in these markets, sometimes in a leveraged fashion. Trades may be designed as an outright directional bet on an asset class or geographical region (e.g., long Japanese equities), or they may be designed to take advantage of geographical imbalances within an asset class (e.g., German 10-years relative to U.S. 10-years). To identify extreme price valuations, managers generally employ a top-down, global approach that concentrates on forecasting how global macroeconomic and political events affect the valuations of financial instruments. ...