With the political and economic shifts under US President-elect Donald Trump expected to dominate the global financial landscape in 2025 and beyond, macro hedge fund strategies have emerged as the preferred choice for many investors, according to a report by Reuters.
This year, hedge funds capitalised on volatile markets driven by major political events, such as November’s US election, and shifts in monetary policy, including the Bank of Japan’s interest rate hikes. Many investors believe the coming year could bring even greater turbulence, according to hedge fund managers and recent survey data.
“Macro strategies are particularly compelling right now due to the uncertain political backdrop and its implications for both fiscal and monetary policy,” said Craig Bergstrom, Chief Investment Officer at Corbin Capital Partners.
The incoming Trump administration’s proposed tariff increases could ripple through the global economy, potentially weakening the Chinese yuan and the euro while exacerbating inflationary pressures. Such dynamics might limit the Federal Reserve’s ability to reduce interest rates, further amplifying market uncertainty.
While cryptocurrency-focused hedge funds outperformed other strategies in 2024, with Preqin reporting an impressive 24.5% annualised return, investor confidence in their prospects for 2025 appears to be waning.
In a November survey of 239 investment firms conducted by Societe Generale, macro strategies topped the list of preferred hedge fund approaches, while crypto ranked at the bottom.
Nearly 40% of respondents expressed plans to allocate funds to macro strategies, the report says. However, interest in government bond trading has declined, with commodities and equities-focused funds taking the second and third spots in popularity.
Jordan Brooks, Co-Head of the Macro Strategies Group at AQR, noted that sovereign bonds are losing prominence.
“Inflation is now more balanced. From here, we think things are less certain across the board,” said Brooks, highlighting currency markets, which trade $7.5tn daily, as a critical area of interest.
Despite Trump’s pro-crypto stance, including promises of favourable regulations and Bitcoin accumulation, institutional investors remain cautious.
“We haven’t seen a lot of institutional investor demand on the solutions side for crypto trading strategies,” said Carol Ward, Man Group’s Head of Solutions.
In Asia, some hedge funds have dipped into crypto investing, but results have been minimal, said Benjamin Low, a Senior Investment Director at Cambridge Associates. While crypto could offer diversification benefits, its extreme volatility and broad definition raise concerns among investors.
However, attitudes are gradually evolving. Many hedge funds have updated their policies to allow for crypto exposure, said Edo Rulli, Chief Investment Officer of Hedge Fund Solutions at UBS Asset Management. Still, large-scale investments in crypto by non-specialist funds remain rare due to regulatory, reputational, and fraud risks.
Some specialised funds have thrived in the crypto space. Hong Kong-based NextGen Digital Venture reported a 116% gain through November, driven by stocks like Coinbase, MicroStrategy, and Marathon Digital Holdings. Founder Jason Huang is optimistic about launching a second crypto fund but warns of potential market peaks for Bitcoin in 2025.
Meanwhile, hedge funds, including Millennium Management, Capula Management, and Tudor Investment, boosted their exposure to the US bitcoin ETFs in Q3. Multi-strategy funds have also invested in convertible bonds of MicroStrategy, whose bitcoin holdings propelled its shares to a nearly 500% increase this year.
SkyBridge founder Anthony Scaramucci remains cautious about the widespread institutional adoption of crypto. “We’re creating now a regulatory runway. Big institutions, endowments, big enterprises, they don’t want to get fired. They’re sitting on top of piles of money, and it’s their job to take measured risk,” he said.
