Hedge Fund Investing: A Practical Approach to Understanding Investor Motivation, Manager Profits, and Fund Performance

Organizational Structure

The typical global macro fund employs most of its people in research, trading, technology, and risk management. Unlike firms that trade individual stocks and bonds, global macro oriented firms have less staff dedicated to operations and treasury activity because most of the instruments traded are liquid, exchange listed, centrally cleared, and settled and do not generate significant dividends and coupons.

A single managing director or general partner who is the founder of the firm most often owns the management company of a global macro fund and is ultimately responsible for the performance and behavior of the firm. In addition, it most certainly employs a head of research, head of trading, head of investor relations, and a CFO, CEO, or COO who is responsible for the business side of the firm. Global macro funds can range from 7- to 10-person shops operating in a single location to firms that employ over 100 people and operate globally.

A typical firm managing $500 million might employ two to three people in research, one or two in trading, one person in marketing, and two or three in administration, compliance, and fund accounting for a total head count of 6 to 11 people in addition to the founder. Global macro organizations tend to rely less on a traditional prime broker, if any, and do not normally engage in securities lending or borrowing activities. Most global macro funds rely on a single or dual futures commission merchant relationship to hold positions ...