Describing Liquid Alts: Global Macro and Tactical Asset-Allocation Strategies
Several types of strategy groups invest across multiple asset classes, dynamically adjusting relative exposures at the discretion of the manager. Two commonly offered dynamic asset-allocation strategies are tactical and global macro.
Tactical funds are typically long-focused and dynamically adjust relative exposures to various asset classes based upon systematic models. The returns of these strategies greatly depend on the ability of these systematic models to successfully time the market. In some extreme cases, mistimed allocations can result in losses even during periods when all underlying assets rise.
Global macro managers take discretionary positions based on the manager’s macroeconomic and political views, taking long and short positions in a wide variety of instruments including equity, fixed income, foreign exchange, and commodities. These strategies often make significant use of derivative contracts. Many global macro strategies can offer low correlation to traditional asset classes, but returns and risk profile depend largely on the skill of the manager.
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