Hedge fund firm Emergent Asset Management told Reuters on Monday it aims to raise EUR300 million (239 million pounds) for a global macro fund, because it believes conditions are now “perfect” for such strategies.
The Emergent GeoMacro Fund will be launched on July 1 and will target an annual return of more than 15%.
“(Over the past two years) we didn’t believe in the macro world so we found special situations,” says Emergent Chief Investment Officer and co-founder David Murrin, who will co-manage the fund with Tim Yetman, founder of Olea Capital.
“This environment that’s coming up is looking very exciting (for macro funds) … We’re not going back in terms of volatility.”
Global macro funds bet on the likes of global equity markets, world currencies, sovereign debt and commodities and typically benefit from increased volatility.
In the first three months of the year global macro funds have returned 6.88%, according to Credit Suisse/Tremont, making them one of the best performing strategies. The average fund is down 2.01% over the same period.
Murrin says he expects the US dollar to weaken significantly over the coming two-to-three years, as Western economies are hit by stagflation.
“In a commodity cycle, the consumer goes backwards because of inflationary dynamics, while producers do very well,” he says. “There’s one trade — short the dollar and equities, long bonds and gold. People think that lower interest rates will lead to higher equities. If you look at the reality of what’s going on in the economy, interest rates will not help.”