Global Macro Interest Increases
Since January concluded, many investors and fund managers alike have been anxiously anticipating results from the first month of the year. Over the past week, many funds and indexes have tallied their month-end numbers, and it appears global macro fund investors have reason to smile. The Credit Suisse Global Macro Liquid Index, LAB Global Macro Liquid Index, finished up 1.18 percent for the month.1
January saw a major uptick in the number of investors that expressed interest in global macro funds. During the month, 118 investors expressed interest in researching and allocating capital to these funds. That figure represents a sizeable increase from January of 2009 when only 67 investors were actively looking for global macro funds. January’s interest also represents a significant increase from the 73 investors that BHA spoke with in December of 2009 that indicated an interest in the strategy.
From their daily phone calls with institutional investors, BHA analysts reported hearing interest in global macro strategies from a wide array of investors across the globe. Some cited the potential for positive performance as driving their interest; many others cited diversification of assets combined with the potential to provide for uncorrelated returns.
A family office based in California currently has a unique approach to a potential fund investment. Although it is in the early stages of evaluating funds, and is very much still framing the particulars for its search, the family office is pursuing diversified macro funds that are trading a variety of underlying assets using a discretionary approach. The family office is especially interested in funds trading in developed yet off-the-radar markets, such as Australia, New Zealand, and Norway. Because each of these markets sees far less activity than the United States, Western Europe, or Asia, it believes the potential for a fund to provide uncorrelated returns is high.
A family office based in Hong Kong similarly expressed interest in global macro funds, but it has a different reason: it wants to see a fund that is exclusively trading assets it can evaluate fundamentally. As part of the firm’s search, it has included discretionary macro funds that have a history of providing consistent returns when trading throughout the United States, Western Europe, and China. The family office feels that funds experienced in trading in and out of major markets are poised to provide strong returns over the next couple of years.
Although global macro funds started off the year with a strong month of performance, it will be interesting to monitor how the strength of the returns in the short term affects investor interest over the next quarter. In all likelihood, investor interest will be closely tied to economic growth, the stabilization of global markets, and the ability of individual funds and managers to trade in and out of specific markets effectively. It is undoubtedly a trend that BHA analysts will continue to monitor in the weeks and months ahead.
1 FINalternatives, “Global Macro Advances, Long/Short Declines in January,” February 2, 2010, http://www.finalternatives.com/node/11220.