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Global Macro Hedge Fund Investing: An Overview of the Strategy

November 22, 2010 / by NEPC

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Since the latter half of 2007, a number of significant macroeconomic factors have dominated the global investment landscape.  What started out as a bursting of the housing bubble in the United States turned into a cascading series of events that eventually threatened the entire global financial system in 2008 and 2009.  The following issues lay at the heart of the financial crisis: ill-conceived and poorly constructed financial derivatives products, an overleveraging of consumer and financial institutions, the collapse of the housing market, a slowdown in consumer spending and, consequently, a precipitous fall in employment.  As a result, many fundamental investment strategies based on micro-level analysis of company-specific situations have had their difficulties.  During this time, however, an investment strategy that has differentiated itself — both in terms of producing positive absolute returns and in assisting to diversify the risks of institutional portfolios — has been global macro.

Topics: Hedge Funds, Research

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