Managing Downside Risk with Global Macro Strategies
Today, investors are faced with equity markets at all-time highs and trillions of dollars in fixed income generating negative yields. The expected return outlook for traditional asset classes is weak, and with volatility near alltime lows, the likelihood of an uptick is high. Historically, global macro has held up well in these types of markets, in part, because of a long volatility bias and active hedging. Amid concerns about potentially unsteady and down markets, we believe two of the strategies employed by global macro managers are particularly worthy of consideration today: long volatility and tail risk.
What is Global Macro?
Global macro is an investment style that is very diverse: Managers have the flexibility to take long or short positions in any global market using any liquid financial instrument. These strategies can be highly opportunistic and have the potential to generate strong risk-adjusted returns in challenging markets.
Today, investors are faced with equity markets at all-time highs and trillions of dollars in fixed income generating negative yields. The expected return outlook for traditional asset classes is weak, and with volatility near alltime lows, the likelihood of an uptick is high. Historically, global macro has held up well in these types of markets, in part, because of a long volatility bias and active hedging. Amid concerns about potentially unsteady and down markets, we believe two of the strategies employed by global macro managers are particularly worthy of consideration today: long volatility and tail risk.
What is Global Macro?
Global macro is an investment style that is very diverse: Managers have the flexibility to take long or short positions in any global market using any liquid financial instrument. These strategies can be highly opportunistic and have the potential to generate strong risk-adjusted returns in challenging markets.
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