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Investors Favor Macro Hedge Funds With Flows, But This Strategy Is Outperforming Macro


The war in Ukraine, skyrocketing inflation and soaring commodity prices have combined to create the perfect setting for macro hedge funds this year, and most of them have taken advantage of it. Investors also expected robust returns from macro funds, so they have already poured billions of dollars into the strategy year to date.

However, there is one other hedge fund strategy that’s outperforming macro year to date, and that’s managed futures.

Macro events boost macro hedge funds

According to a report from With Intelligence released last week, the HFM Macro Index was up 3% for the first quarter and 5.7% for the 12 months ending in March. Managed futures funds returned 7.7% for the first quarter and 5.5% for March.

The HFM Global Composite was roughly flat for the first quarter, down 0.1%, while U.S. stocks declined 4.9%. Equity funds were in the red for the first quarter, returning -3.6%. Event-driven funds were 1.5% for March and 0.4% for February but down 2.1% for January.

Data from With Intelligence shows that 65% of macro funds recorded positive returns for the first quarter, compared to 35% of other strategies, including funds of hedge funds.

Investors favor macro funds

The data also reveals that investors poured 7.4 billion in capital into macro hedge funds during the first quarter. As a result, 60% of the funds utilizing the strategy had positive flows, compared to 46% of other strategies. The inflows marked a significant reversal from last year, when macro funds racked up $2.7 billion in outflows, compared to the entire industry’s net inflows of $30 billion.

For the first quarter, only multi-strategy funds had greater inflows at almost $9 billion. With Intelligence reports that nearly one-third of corporate pensions are planning to boost their allocations to macro funds during the first half of the year.

In total, the hedge fund industry recorded $1.8 billion in outflows for March, preceded by $7.2 billion and $6.6 billion in inflows for February and January, respectively. Flow
s for equity funds finally turned negative in March at $300 million, following steep outflows for February of $6.3 billion.

Funds in focus

With Intelligence noted that experienced macro funds were the primary beneficiaries of the recent events. The big winner during the first quarter was the Haidar Jupiter Fund, with a 148.7% return for the first quarter and 54.2% just for March. SPX Capital has benefited from the soaring commodities prices and its Latin American investments with its SPX Raptor Feeder IE FIC FIM CP fund, which is up 31.5% for the 12 months ending in March.

Unsurprisingly, some funds are slashing their exposure to emerging markets due to Russia’s invasion of Ukraine. With Intelligence reports that Trium Capital’s Larissa Global Macro Fund, which focuses on G7 rates and EM sovereign bonds, returned 30.4% for the first quarter.

Meanwhile, Bridgewater’s Pure Alpha fund returned 10.4%. Ray Dalio has been providing wide-reaching commentary on geopolitics, wealth and power, and the consequences of war via his writings and public speaking appearances.

Following Millennium spinout Modular Asset Management’s impressive performance, its management is reopening its flagship macro fund to outside investors following a soft close nearly two years ago. With Intelligence also reports that Mercer’s $48 billion hedge fund unit is seeking systematic and discretionary global macro managers and tail hedging and managed futures managers to meet the increased demand for diversification, downside protection and total returns.

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