Global Economic Uncertainty Fuels Macro Hedge Fund Strategies
As the world grapples with the implications of a new U.S. administration, investors are bracing for a tumultuous year ahead. Hedge fund returns have already benefited from the wild market swings sparked by politics and monetary policy twists in 2024. Now, seven hedge fund investors and portfolio managers are preparing for even more volatility in 2025.
Macro Takes Center Stage
With U.S. President-elect Donald Trump at the helm, macro hedge fund strategies are emerging as the top pick for investors. “Macro seems interesting now given a more turbulent political backdrop and what it means for both fiscal and monetary policy,” notes Craig Bergstrom, chief investment officer at Corbin Capital Partners. The potential for U.S. tariff hikes, yuan and euro weakness, and inflationary pressures are all contributing to the appeal of macro strategies.
Cryptocurrency: A Mixed Bag
While cryptocurrency hedge funds trounced other strategies in 2024 with a 24.5% annualized return, investors are less convinced about their prospects for 2025. In a recent survey by Societe Generale, macro ranked first and crypto last in a list of hedge fund strategies. Although some funds have explored small-scale crypto investing, many are hesitant due to high volatility and regulatory uncertainty.
Institutional Investors Remain Cautious
“We haven’t seen a lot of institutional investor demand on the solutions side for crypto trading strategies,” says Carol Ward, head of solutions at the $175 billion Man Group. Benjamin Low, a senior investment director at Cambridge Associates, adds that the definition of crypto is too broad, making it difficult for investors to understand what they’re trading.
A Glimmer of Hope
Despite the reservations, attitudes towards crypto are changing. Many funds have updated their investor documents to allow for crypto exposure, and some have found ways to trade crypto indirectly. NextGen Digital Venture, a Hong Kong-based hedge fund specializing in crypto stocks, jumped 116% this year through November. Founder Jason Huang is preparing his second crypto-focused fund, but cautions that bitcoin could reach a cyclical peak next year.
The Regulatory Runway
SkyBridge founder Anthony Scaramucci believes it will take time for crypto to lure more big allocators, as regulatory discussions have only just begun. “We’re creating now a regulatory runway. Big institutions, endowments, big enterprises, they don’t want to get fired. They’re sitting on top of piles of money, and it’s their job to take measured risk,” he says. As the global economy navigates uncharted waters, one thing is clear: investors are in for a wild ride in 2025.
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