Volatility persists in stocks and bonds, as ongoing and newly emerging economic risks dampen outlooks this year. For investors looking to diversify traditional portfolios, a wide range of low correlation alternative strategies exist. Global macro hedge fund strategies provided diversification and notable performance in the first quarter.
Advisors and investors looking for opportunity within alternatives would do well to consider global macro. It’s a hedge fund strategy that attempts to capture opportunities in market changes driven by economics. Managers weigh the impacts of inflation, interest rates, economic growth, geopolitics, and more when constructing their portfolios.
Global macro hedge fund managers invest across a range of asset classes that include stocks, bonds, commodities, and currencies. They take both long and short positions, thereby potentially benefiting when markets gain and when they fall. It’s a strategy with low correlations to the traditional 60/40 portfolio and was the second strongest performer in the first quarter amongst major hedge fund strategies.
The Benefits of Hedge Fund Strategies in an ETF Wrapper
By harnessing the global macro hedge fund strategy within an ETF, investors save significantly on management fees. Investors looking to diversify their portfolios with global macro would do well to look to ETFs like the Unlimited HFGM Global Macro ETF (HFGM). The fund seeks to capture mispricing within global markets.
HFGM takes long and short positions across equities, fixed income, currency, credit, and exchange rate markets. It seeks to capture the alpha potential of global macro hedge funds. It then combines global macro benefits with the tax efficiency and fee savings of an ETF wrapper.
HFGM uses a proprietary, data-driven approach that seeks to identify global macro managers’ current positions. It then replicates the positions in its portfolio, investing in long and short positions in futures contracts and a basket of ETFs. The ETF offers similar returns to the global macro hedge fund sector with twice the volatility of the sector, a strategy that may yield outperformance.
HFGM isolates the global macro segment of the firm’s Unlimited HFND Multi-Strategy Return Tracker ETF (HFND ), which captures a range of hedge fund strategies within a single fund. HFGM is managed by Bob Elliott, CEO and CIO of Unlimited, who brings more than two decades of systematic global macro investing experience to the table. The fund has a management fee of 1.00%.
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