Macro Strategy Hedge Funds - September 2012

by Ross Ford

  • 28 Sep 2012
  • HF

Following another year of uncertainty in the global financial economy there has been an increase in the number of hedge funds launched in 2012 with a macro focus as hedge fund managers look to take advantage of macro-economic conditions to achieve above market returns in a testing economic climate. Thirty-four percent of all funds launched in 2012 to date have a macro strategy as a core focus. Preqin currently tracks information for over 1,500 active hedge funds that use one of the core macro strategies – commodities, foreign exchange, fixed income, macro and managed futures/CTA.

CTAs make up the bulk of macro funds that Preqin tracks, with 53% of funds following a managed futures/CTA strategy. Twenty-eight percent of funds in the global macro sector are pure macro funds and 11% use a fixed income strategy.

Fifty-four percent of the macro hedge funds are based in North America, 36% are based in Europe, and 10% are based in Asia and Rest of World. The Cayman Islands are the most preferred domicile for macro strategy hedge fund, with 35% of funds domiciled there. Delaware is the second most favoured domicile, with 25% of all funds domiciled in this state. Luxembourg is the domicile of choice for Europe-based macro fund managers, with 9% of all macro strategy funds domiciled in this duchy.

Single-manager macro strategy funds charge higher than average management and performance fees of 1.76% and 19.77% respectively, compared to the current industry average for all single-manager hedge funds of 1.64% and 19.18% for management and performance fees respectively. However, within the global macro strategy universe the strategy which offers the lowest fees is fixed income.  Funds with this strategy charge a mean management fee of 1.37% and a mean performance fee of 16.40%, although this is coupled with a long average lock-up period of five months which is higher than any other macro strategy.

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