"Macro" hedge funds are back in favor with investors seeking to take a view on U.S. President Donald Trump's economic policies, European elections, or interest rates, but it is start-up funds rather than established players which are attracting cash.
Some of the main beneficiaries of the macro revival are managers who cut their teeth at the big macro firms such as Moore Capital Management, Brevan Howard and Tudor Investment Corp, which made their names for outperformance in 2007-2009.
Eric Siegel, head of hedge funds at Citi Private Bank, said in general that macro strategies are likely to thrive. “With volatility coming back and monetary supply tightening, we believe it could be a great environment for macro managers,” Siegel said.
Macro funds bet on macroecnomic trends using currencies, bonds, rates and stock futures. They outperformed the broader industry during the financial crisis and amassed tens of billions of dollars between 2010 and 2012. But they lost most of those assets between 2013 and 2014 and also in 2016 for a variety of reasons, including performance.
But macro is back in vogue and was the most popular hedge fund strategy among investors in the fourth quarter of 2016 and the first two months of this year, according to industry data providers Preqin and eVestment.
Moore Capital's Louis Moore Bacon, Alan Howard, who co-founded Brevan Howard, and Paul Tudor Jones of Tudor Investment were among the macro stars after years of delivering double-digit returns.
But during the lean years, when macro was less in favor, they had to cut fees and in some cases staff.
Now newcomers, such as Moore Capital spin-out Stone Milliner, are pulling in cash and producing some strong returns.
Stone Milliner's discretionary global macro closed to new money last year after taking in over $4 billion in the previous two years.
Moore Capital's assets have fallen slightly from $15 billion in 2012 to $13.3 billion as of Dec. 31 2016, filings with the U.S. Securities and Exchange Commission (SEC) showed.