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The New Macro Hedge Fund

According to Hedge Fund Research, the average macro hedge fund has made just 0.7 per cent this year, and 1.52 per cent, on average, annually, for the past three years.  But not all macro fund managers are failing - a new generation of macro funds with a greater focus on emerging economies are succeeding.

The macro Hedge fund appears to have splitted into two camp:  The ‘old’, the ‘traditional’ or the ‘classic’ and the ‘new’.  The ‘old’ group of macro traders would normally focus trading in G3 (German, Japanese and US) bonds and rates.  Most of the big players would fall into the ‘old’ group.  The ‘new’ macro traders are one that have the skills to make money in all kinds of markets such as  Turkey, Eastern Europe, South Africa, Korea, Latin America etc and plus G3.

Here are the performance of the new macro hedge fund – whereby the trades have been decoupled from events in the eurozone and the US:

    1. BTG Pactual Emerging Markets Macro Fund – with AUM of $2.4B, run by Brazilian Investment Bank the fund is nearly up 20% this year.  The success of the fund is attributed to betting on Latin American interest rates and US mortgages.  The fund achieved a 3.4% return last year.
    2. Autonomy Capital Research – with AUM of $2.8B, the US fund manager is up 15% this year.  The success of the fund is also attributed to betting Latin American countries would cut rates.  Robert Gibbins, Chief Investment Officer of Autonomy, told clients he foresaw a harder landing for China than the market was expecting, and predicted a subsequent impact on major commodity-centred economies like Brazil and Chile.
    3. Pivot – with AUM of $1.7B, based in Monaco, took similar bets, has gained 4% this year, 17% last year.  Pivot has also made money by being among the few investors to spot the potential for South Korea’s central bank to cut rates this year – as it has now done twice.
    4. Armajaro Emerging Markets – the fund has benefited from the decoupling and is up 19% this year.

Reference:  Financial Times, Sam Jones, 2012-10-24, “Macro Funds Seek Succour in Emerging Markets”