Institutional investors have been oversimplifying global macro as an investment strategy, according to Pimco.
Pimco executive vice president and product manager alternatives Ryan Korinke told InvestorWeekly that while macros was the top performing hedge fund strategy in 2008 during the global financial crisis (GFC), many institutional investors have been reluctant to alter strategies since then.
“I think some institutional investors have fallen into the trap of thinking about and oversimplifying macro as a strategy,” Mr Korinke said.
“If you dissect what made macro do so well in the GFC it was that a lot of managers basically focused on the free larger markets, particularly in fixed income currencies of the US, Germany and Japan, to take advantage of what the central banks were trying to do.”
However, Mr Korinke said that more recently, central banks have not been cutting rates to increase market prices as interest rates are already in low territory.
He said this, as well as the wider importance of emerging markets, has meant oversimplified macro strategies haven’t performed as well.
“I think a lot of macros managers have struggled to make that transition to the new world where you have to invest across the globe and think a little bit differently to just tying investment decisions to central bank policy in the US, Germany and Japan,” he said.
“The opportunity has changed going forward compared to what has happened in the past.”
