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A year of global volatility is expected, and these are its prospects.
The macro strategy is positioned as the main bet of hedge funds for 2025. With Donald Trump as president-elect of the United States, investors anticipate a significant impact of global policy decisions on the economy and financial markets.
This year, hedge funds made considerable gains thanks to volatility caused by political events, such as the US presidential election, and changes in monetary policy, such as the Bank of Japan’s rate hikes.
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Against this backdrop, fund managers anticipate greater volatility in 2025, according to a recent survey and the opinions of seven investors and portfolio managers.
The reasons behind the rise of macro strategy
Craig Bergstrom, chief investment officer at Corbin Capital Partners, notes that the macro strategy is attractive due to increased political turbulence and its impact on fiscal and monetary policy.
Potential U.S. tariff hikes under the Trump administration could further weaken the Chinese yuan and euro, while generating inflationary pressures that could limit the Federal Reserve’s ability to reduce interest rates.
Interest in macro strategy has surpassed other alternatives.
We clearly see how the Societe Generale survey has been favorable for investment funds based on “Quantitative Global Macro” alternatives, and the “Relative value of fixed income” efforts lose all possible attractiveness by 2025. Source: Yahoo Finance.
In a Société Générale survey of 239 investment firms, the macro strategy ranked first, while cryptocurrencies came last. About 40% of respondents declared their intention to invest in macro strategies, while interest in trading government bonds decreased.
Commodities and stocks: other alternatives on the rise
Funds that operate in commodities and stocks also stood out, occupying second and third place in investor preferences. Jordan Brooks, co-head of Macro Strategies at AQR, agreed that sovereign bonds are losing relevance.
According to Brooks, inflation is now more balanced, and greater uncertainty is expected in financial markets, especially in the foreign exchange market, which moves $7.5 trillion a day.
Cryptocurrencies are losing appeal, but they are not disappearing
The rise of cryptocurrencies in 2024 did not completely convince hedge fund investors. Although funds specialized in cryptocurrencies returned 24.5% annually, caution prevailed for 2025. Cryptocurrencies were at the bottom of the list of preferred strategies.
For large managers, volatility is synonymous with profit, due to their high level of qualification; But everything has a limit, and that limit is set by risk management: Bitcoin shows excessive volatility at certain times and avid managers prefer not so much possible profit in the face of so much shock. Source: Yahoo Finance
Carol Ward, from Man Group, assured that they have not detected a large institutional demand for Cryptocurrency strategies. Benjamin Low of Cambridge Associates mentioned that some Asian funds explored small investments in cryptocurrencies, but without notable results.
Crypto as a diversifier, but with doubts
Cryptocurrencies could act as a diversifier that operates differently from traditional markets. However, the high volatility and lack of clarity about what is being traded (cryptocurrencies, company shares or participations in platforms) raise doubts among investors.
Edo Rulli, chief investment officer at UBS Asset Management, said that although some funds have updated their documents to allow exposure to crypto assets, regulation remains a key concern.
Specialized crypto funds make a difference
Despite general doubts, some specialized crypto funds have been successful. The Hong Kong-based NextGen Digital Venture fund has returned 116% through November 2024, thanks to its exposure to stocks such as Coinbase, MicroStrategy and Marathon Digital Holdings.
Jason Huang, founder of NextGen, is preparing a second fund focused on cryptocurrencies, although he warned that Bitcoin could reach a cyclical peak in 2025.
Exposure of large funds to Bitcoin ETFs
Prominent hedge funds such as Millennium, Capula and Tudor bet heavily on Bitcoin in the last quarter. They invested in spot Bitcoin ETFs and acquired bonds from MicroStrategy, the company with the most Bitcoin in the world. MicroStrategy shares have quintupled in 2024.
Anthony Scaramucci, founder of SkyBridge, believes that the adoption of cryptocurrencies by large investors will be slow. Larger institutions and endowments are cautious. They prefer measured risks, especially in the face of a regulatory framework that is still developing. According to Scaramucci, these institutions have a lot of money and their priority is to manage risk appropriately.
Conclusion: the prominence of macro strategy
In a context of greater political uncertainty and economic volatility, the macro strategy emerges as the favorite for 2025. Hedge funds prioritize this option due to its ability to adapt to changes in fiscal and monetary policy. Although cryptocurrencies continue to attract attention, their high volatility and lack of regulation raise questions.
In contrast, the macro strategy presents itself as a solid and adaptable alternative, making it the most attractive option for hedge fund investors in 2025.
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