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Trends: Global Macro is making a comeback

Date: Tuesday, February 19, 2008
Author: Wall Street Journal

From the WSJ: As Wall Street firms hunger for dependable trading profits, an out-of-favor strategy is making a comeback. Now that volatility has returned and interest rates are moving, some traders using a so-called global macro strategy are thriving. By betting on economic trends in currencies, interest rates and other instruments around the world, these traders have been scoring big gains.

Last year, global macro funds rose more than 17% on average, according to Credit Suisse/Tremont Hedge Fund Index. These funds gained 1.7% on average in January, according to Hedge Fund Research, a Chicago-based research firm.

One of the funds with the biggest gains is Alan Howard's $20 billion Brevan Howard Asset Management LLP. The London-based fund racked up winnings of about 10% last month, even as many hedge funds sputtered and global stock markets tumbled. Mr. Howard's profits come on the heels of gains of 25% in 2007 for his firm's flagship hedge fund.

Other winners include GLG Partners Inc.'s macro fund, managed by Greg Coffey, which was up 51% last year, and Peter Thiel's Clarium Capital Management, which jumped more than 24% in January and more than 40% in 2007.

These kinds of funds can include a variety of styles -- and returns vary wildly. Paul Tudor Jones's Tudor Investment Corp., one of the largest and most respected macro funds, gained less than 1% in January, investors say, while Goldman Sachs Group Inc.'s Global Alpha fund has been struggling.