Global Macro Strategy Essay

In this sample essay, we shall discuss the topic of global macro strategy. As this is an important topic for students, we shall discuss the various topics and parts of this concept. Adding to this, we have another sample essay closely related to this one which is “alternative investment” (add a link here).

Moving on, in this sample essay we shall discuss the following topics: firstly we will be looking at the definition of global macro strategy as it is important to know before moving the discussion any further. After this, we shall look at the different kinds of global macro strategy and types of global macro funds. Finally, we end the discussion by looking at the advantage of the global macro strategy.

What is a global macro strategy?

A global macro strategy refers to a type of hedge fund (also known as a mutual fund) trade and investment strategy which primarily concerns itself with macroeconomic events including national, regional, and global scale. Moreover, strategists often research and analysis various factors including equities, fixed incomes, national currency, commodities, and potential of the future market.

Moving on, the success of the global macro strategy depends of interpretations of the factors we discussed above. Nevertheless, the term “hedge funds” refers to alternative investment by using pooled funds that use different strategies in order to earn profitable returns.

Types of global macro strategy

In this section of the sample essay, we shall discuss the different types of global macro strategy. Adding to that, there are three types of global macro strategy that we will be going through. Without further adieu, the types of global macro strategy are as mentioned below:

1. currency-related strategy
2. interest rate-related strategy
3. stock or equity index-related strategy

Now we shall discuss each of three types in brief below:

Currency-related strategy

In a currency-related strategy, the funds explore potential investment based on the relative value of a currency i.e. value of one currency compared to another. Moreover, it analyzes economic policies and monetary policies of nations across the world to explore the best investment options.

Interest rate-related strategy

As the name suggests, interest rate strategy focuses on investment in sovereign debts, employing directional bets along with relative value trades. Similar to currency-related strategy; this too studies monetary policies as well as the economies and political situation.

Stock or equity index-related strategy

Stock or equity index-related strategy involves analyzing the equity and commodities index of concerned nations using the ETFs i.e. exchange trade funds. Moreover, it mainly focuses on the liquidity of assets which can be easily traded as the namesake of liquidity. This implies that there are no risks involved.

Types of global macro funds

In the previous section of essay samples, we explored the different type’s global macro strategies. In addition to that, we shall also discuss the different kinds of global macro funds involved in such strategies. Moving on, the different kinds of macro funds are as mentioned below:

Furthermore, many hedge funds use various global macro funds which can be divided into two categories. These two categories are as follow:

1. Discretionary macro funds
2. Systematic macro funds
3. Commodity trading advisor or CTA

We shall discuss these two in brief below:

Discretionary macro funds

This form of funds concerns itself more with macroeconomic and geopolitical factors. Discretionary macro investing gives one flexibility and the ability to gain profit while the market is in a decline.

Systematic macro funds

Systematic macro funds, this global macro strategy focuses on short and long-term trends in economic data. Moreover, this strategy is primarily used by quant hedge funds.

Commodity trading advisor or CTA

This global macro funds employees several investment products. However, to build portfolios and execute trading funds, these funds focus on price-based and trend-following algorithms.

Advantages of global macro strategy

In the last section of the global macro strategy sample essay, we shall discuss the advantages of the same. Nevertheless, the advantages are as mentioned below:

• This strategy helps identify long-term trends in the market
• Global macro strategy assess market sentiments
• Using these strategies provides one confidence in the market
• Global macro strategies are known to be flexible

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