– Timing and discipline “key” to returns in 2020, says BlueBay –
Macro-focused hedge funds have enjoyed a resurgence in recent months, generating a 6.50 per cent annual gain in 2019, aided by a 1.73 per cent return during the final quarter of the year, according to eVestment’s aggregated hedge fund performance data.
– Timing and discipline “key” to returns in 2020, says BlueBay –
Macro-focused hedge funds have enjoyed a resurgence in recent months, generating a 6.50 per cent annual gain in 2019, aided by a 1.73 per cent return during the final quarter of the year, according to eVestment’s aggregated hedge fund performance data.
The positive returns underline a reversal in fortunes for the strategy class, which has frequently struggled to notch up meaningful performances amid the post-2008 low interest rate environment and, more recently, an increasingly volatile and uncertain geopolitical landscape.
Looking ahead, the prospective easing of trade hostilities between the US and China – coupled with a lack of divergence among central banks and policymakers on interest rates – may offer a more positive investment backdrop, according to BlueBay Asset Management.
Timing and discipline remain key, says Mark Dowding, chief investment officer at BlueBay in London. He suggested the next 12 months will be characterised by “calm and falling volatility with periodic spikes in vol around political or geopolitical events”, with understanding when to add and remove risk proving pivotal for those funds that trade macroeconomic themes.
Commenting on eVestment’s data, Peter Laurelli (pictured), global head of research, said: “Macro funds finished the year strong returning +1.24 per cent in December, and similar to managed futures funds, the largest managers outperformed their peers. The ten largest reporting macro funds also returned an average of +9.34 per cent in 2019.”
Individual macro funds that recorded strong gains last year include long-running Caxton Global, which was up more than 19 per cent, and Graham Capital Management’s flagship strategies Graham Absolute Return and Graham Global Investment, which advanced 9.45 per cent and 6.46 per cent respectively, according to data seen by Hedgeweek. Edouard de Langlade’s EDL Global Opportunities Fund, which launched with backing from Louis Bacon’s Moore Capital in 2015, rose 6.27 per cent annually last year.
“The year ahead may see more of a trading range develop,” Dowding said in a note. “Unlike in 2019, when calling market direction was key to generating positive returns; in the coming months where we envisage more of a rangebound market, getting timing right may be equally important. Identifying ranges with the intent of selling a sustained rally and buying into a sell-off could be the right approach to adopt and may call for some discipline.”
Macro funds slumped 2.97 per cent in 2018, eVestment data showed, as more combative trade relations and increasingly nationalist inflationary policies among the major economies began to bite.
The squeeze on returns in recent years led to several high-profile macro casualties. Rubicon, the flagship fund of UK hedge fund veteran Paul Brewer, once made 45 per cent during the global financial crisis, but closed early last year following disappointing performance. Hugh Hendry’s Eclectica fund made similarly strong gains during the 2008 crash, but shuttered in September 2017 following sustained losses.
