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What is a Global Macro Hedge Fund?

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  • Written By: Ryan Russell
  • Edited By: Lauren Fritsky
  • Last Modified Date: 14 September 2016
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A global macro hedge fund is an investment fund that invests on global macro principles. This means investors at the hedge fund follow a macroeconomics style to investing and invest in assets all over the globe. Global macro hedge fund managers have the freedom to invest in any market in the world using any financial instrument they want.

The managers at a global macro hedge fund look for opportunities to invest in assets that provide limited risk and significant reward. They typically maintain very diversified portfolios given their proclivity to invest in markets all over the world. Global macro investors operate by fewer rules than investors using different strategies, but they are also usually expected to generate bigger returns.

Investors at a global macro hedge fund look for atypical price variations that could indicate that a particular asset is undervalued. This happens when popular perception belies the actual health of the underlying economics governing a market. Global macro investors will often set a definite price threshold in certain markets. If a particular asset falls below this threshold, the investors will purchase the asset on the belief that they will make a future profit. The investor’s ability to invest with proper timing is crucial to long-term profitability.

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This type of investor employs discretionary and systematic methods when approaching quality investments. Some investors may combine the two approaches, but most prefer one over the other. With a discretionary approach, the investor relies on his own assessment of a given market or trade. With a systematic method, the investor uses a mathematical system to decide when he should act.

The global macro investors typically take a highly-leveraged position when investing. This allows for enormous profits when correct and significant losses when incorrect. As a result, global macro investors are often thought of as the ultimate risk-takers. Global macro hedge fund managers use their willingness to invest in obscure markets to their advantage. They often take positions other investors are unwilling to take or are unfamiliar with.

This type of fund can be tremendously profitable if ran by the right managers. Global macro investors have to possess knowledge beyond the average investor in order to be successful. They often take enormous risk with a client’s money, but it is usually well-calculated. A global macro hedge fund is a good place to invest money for individuals who are seeking large returns with the understanding that they could experience large up and down swings in their portfolios.

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