Most of these funds are unconstrained, and can invest in any asset class or geography, leading some investors to dub them “go-anywhere” funds. The classification is heterogeneous, and performance is driven by a variety of factors that change as the manager makes new bets. Depending on the factor exposures of each strategy, these funds can be used as stock complements, bond complements, or portfolio diversifiers. The flexibility of these funds adds upside potential, but it also adds an additional layer of complexity for advisors and investors. Consequently, when using these funds, advisors must carefully identify and closely monitor the factor exposures and the impact of the fund on the portfolio's asset allocation.
Funds that, by prospectus language, invest around the world using economic theory to justify the decision-making process. The strategy is typically based on forecasts and analysis about interest rate trends, the general flow of funds, political changes, government policies, intergovernmental relations, and other broad systemic factors. These funds generally trade a wide range of markets and geographic regions, employing a broad range of trading ideas and instruments.
Definition of the Lipper classification: Alternative Global Macro Funds
Alternative Global Macro Funds cover a broad swath of approaches and strategies. According to Lipper, these funds make investment decisions based on economic, monetary, ...