Chapter 3

The Future of Global Macro Hedge Funds

The restructuring of Soros Fund Management and the winding down of Tiger Management marked the end of the global macro giant era. Gone are the days when a few strong personalities dominate a small, concentrated number of funds and markets. The increase in information flow, competition, influx of assets, and development of new markets has added tremendous complexity and scope to the global macro landscape today. The strategy that started with Keynes and made famous by Soros has become a broadly diversified collection of many different managers and styles.

One of the main reasons for the trend away from the big mega-funds is the issue of diseconomies of scale encountered by hedge funds when a large asset base is accumulated. When a fund gets too big—and many would put Soros and Tiger during the late 1990s into this camp—meaningful positions can only be taken in the most liquid instruments and deepest markets, thus limiting scope and diversification options.

As Christian Siva-Jothy (SemperMacro) notes in his interview later in this book, Soros and Tiger used to be able to drive macro markets, so one had to pay attention to their activities. That is no longer the case for any one fund today. Along the same lines, Marko Dimitrijeviimage (Everest Capital) observes that emerging markets, which used to be controlled by a few guys sitting in New ...

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