A must-have macro analysis for hedge fund investors betting on 2025 market volatility By Reuters

By Nell Mackenzie, Carolina Mandl and Summer Zhen

LONDON (Reuters) – The next one (LON:) the top pick of the year for hedge fund strategies is called macro, with US president-elect Donald Trump taking center stage as investors bet on how global policy decisions will affect the state of the economy and play out in financial markets.

Hedge fund returns have benefited this year from volatile market swings caused by politics like the November US election, and monetary policy twists like the Bank of Japan’s rate hike.

And investors are preparing for more volatility next year, seven hedge fund investors and portfolio managers told Reuters and a recent survey showed.

“ A macro (BCBA:) looks interesting now given the turbulent political environment and what it means for both fiscal and monetary policy,” said hedge fund investor Craig Bergstrom, chief investment officer at Corbin. Capital Partners (WA:).

US tax hikes under the new Trump administration could deal the global economy a new blow, further weakening the euro and the euro, while adding to inflationary pressures that slow the Federal Reserve’s ability to cut rates.

Although hedge funds active in cryptocurrency started some strategies in 2024, with data provider Preqin estimating an annual return of 24.5%, investors are less confident in 2025.

Macro ranked first and crypto last in a list of hedge fund strategies of 239 investment companies surveyed by Societe Generale (OTC:) in November.

About two-fifths of those surveyed are macro investors, a client note seen by Reuters said, adding that interest in trading government bonds has waned. Meanwhile, commodities and equities are ranked second and third.

Jordan Brooks, co-head of the Macro Strategies Group at investment management firm AQR agreed that sovereign bonds are becoming an important investment theme.

“Inflation is now very balanced. From here, we think things are a little uncertain across the board,” said Brooks, adding that the $7.5 trillion currency market per day will focus.

CRYPTO? NOT YET

Although Trump has embraced digital assets, promising friendly regulation and accumulating large amounts of bitcoin, some hedge fund investors are not convinced.

“We have never seen a greater demand from institutional investors on the side of crypto trading strategy solutions,” said Carol Ward, head of solutions at $175 billion. The Human Group (LON:).

Benjamin Low, senior director of investments at Cambridge Associates, said that some Asian-based funds have explored investing in small crypto currencies, but nothing yet.

Crypto can serve as a good allocator that trades differently from the broader market, said Low, whose advisory firm connects hedge funds with investors and selects fund managers and allocates clients.

“But the volatility is very high, when you talk about crypto, what do you trade, is it just cryptocurrencies, do you buy from companies or currencies?” Pansi said.

“This definition is so broad and broad that it may invite many questions from existing investors,” he added.

However, attitudes are changing and many funds have updated their investment documents in the past few years to allow them to include crypto exposure, said Edo Rulli, CIO of hedge fund solutions at UBS Asset Management.

“Great exposure to non-professional hedge funds has not yet arrived. Digital asset exchanges are not regulated and some carry the risk of defamation and fraud,” said Rulli, adding that some hedge funds have found ways to trade crypto indirectly.

NextGen Digital Venture, a Hong Kong-based hedge fund that specializes in crypto stocks, jumped 116% this year in November, thanks to exposure to stocks like Coinbase (NASDAQ: ), MicroStrategy , and Marathon Digital (NASDAQ: ) Holdings .

Founder Jason Huang is preparing his second crypto-focused fund and while optimistic, he warned that bitcoin could reach a cyclical peak next year.

Meanwhile, hedge funds including Millennium Management, Capula Management and Tudor Investment increased their exposure to US spot bitcoin ETFs in the third quarter, the filing showed.

And many strategic funds have bought convertible bonds of software company MicroStrategy, a major bitcoin investor, whose shares have risen nearly 500% this year.

Skybridge founder Anthony Scaramucci said it should take a while for the crypto to attract major providers, as potential regulatory discussions have already begun.

“We are now creating a regulatory channel. Large institutions, endowments, large businesses, they don’t want to be fired. They are sitting on piles of money, and it is their job to take the risk,” he said. .