Global Macro Trading: Why It’s a Timeless Tactic

MarketsMuse Editors Note: Giving credit when due and in connection with below excerpt, MarketsMuse extends a “shout-out” to UK-based publication CampdenFB, one of several ‘banners’ serving the family office universe and operated under the Campden Wealth media umbrella.

“….With such pitiful returns, is it any wonder why global macro investing has fallen out of favour with many family offices?…”

Indifference to the style should not translate into ignorance of the geopolitical climate and macroeconomic data, warns Steven Drobny, founder of Santa Monica-based Drobny Capital and author of Inside the House of Money.

“Global macro is the hardest strategy to understand in the hedge fund space because of its breadth of instruments, markets, and inherent complexity, but the macro world is the driver of everything,” says Drobny. “You can’t just pick a stock based on fundamentals without understanding how it can be impacted by geopolitical risk, the price of oil, interest rates and other macroeconomic issues.”

For most developed-world family offices, Drobny says if you’re looking to diversify your portfolio, there are not a lot of opportunities within the highly correlated world of fixed income and equities. You need to look at global macro exposure.

“You don’t need to be a ‘macro guy’ trading fixed income arbitrage opportunities or frontier market sovereign bonds – or even put all your money in macro hedge funds. But you do need global macro exposure, as well as an understanding of what implicit macro bets you have in your broader portfolio,” says Drobny. “You need to look forward, not backwards, which means maintaining a strong understanding of how the world may evolve.”

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