lobal Macro strategies invest by making leveraged bets on anticipated price movements of stock markets, interest rates, foreign exchange and physical commodities. Macro managers employ a “top-down” global approach, and may invest in any markets using any instruments to participate in expected market movements. These movements may result from forecasted shifts in world economies, political fortunes or global supply and demand for resources, both physical and financial. Exchange-traded and over-the-counter derivatives are often used to magnify these price movements.

As the name suggests, macro-investing managers seek opportunities based on macroeconomic factors. Based on the manager’s expectations about the market environment, the manager may take on positions that the manager anticipate to make the best investment return in the forecasted environment. When macroeconomic information is released, managers identify any changes and reevaluate current positions to determine if any changes have to be made. The investment policy is flexible and managers make leveraged bets across multiple markets, sectors, instruments and trading styles as the macro conditions so dictate. Investments are based on forecasts of changes in interest rates, currency markets, equity markets and global political and economic policy. Macro investing is most well known for opportunistic directional positions, but the strategy is actually a mixture of many other hedge fund strategies. Global macro managers can take positions in distressed securities, make bets on merger situations and seek arbitrage opportunities in fixed income markets.