In recent years, the effectiveness of diversification has been called into question, particularly when it is implemented through a conventional pairing of equities and bonds. The current investment landscape, characterized by heightened macroeconomic volatility and unstable asset correlations, necessitates a fresh evaluation of how diversification is applied.
Institutional investors have spoken: Global Macro remains at the top of the hedge fund allocation list for 2025. But why? The answer lies in a changing market landscape, an effort to mitigate outsized equity market risk, and a history of resilient performance during periods of market turmoil.
Advisors face an equity market landscape marked by opportunity and challenge. The near-term outlook for 2025 has many strategists forecasting double-digit gains for U.S. equities, driven by robust earnings growth, resilient consumer demand, and innovation in sectors like AI. Potential policy tailwinds like tax cuts and decreased regulation further support optimism.
Over the past few weeks, I have spoken with a couple dozen financial advisors to understand how they are managing the current investment climate and, in particular, how they are thinking about incorporating alternatives into their portfolios in an uncertain world. Here are five takeaways from these discussions.
You’ve decided that Macro or Trend is right for your portfolio, but now what? How do you narrow the field with so many managers and offerings? We discussed this ourselves, and here’s a short video clip to get you started.
Where can Macro contribute the most, and how might this change in the year ahead? The engines are returns, noncorrelation, and downside performance, and each contributes in essential ways.
Last month, we joined a distinguished panel of European institutional investors to discuss our shared hopes and real-world experience associated with moving ESG investing into the systematic investing frontier. The topics shared were enlightening, and offer a concise state of the industry on this topic.
With a risk-free rate of 5%, investors have options that were not available two years ago, and this is now the bogey that managers are compared to. So, do higher rates improve a hedge fund’s performance expectations, or are they a headwind? As with most things, it depends.
Investors' natural aversion to drawdowns can lead some to harmful action or inaction well-described in the field of behavioral finance. The best strategic and tactical investors harness a disciplined pursuit of value to capture the available excess return.
Many investors are rediscovering Quant Macro and Trend Following after a bruising 2022 for equities, bonds, and other asset classes. The S&P 500 lost -18%, but worse, bonds lost -13% when they were supposed to provide much relied-upon diversification. By comparison, indices like the SG Trend Index returned +27% in 2022, recapturing investors’ interest in Quant Macro and Trend Following.
