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The phrase “higher for longer” has gained traction of late, as the world’s central banks have indicated they may need to maintain interest rates at current (or potentially higher) levels to continue combating inflation.
Higher interest rates have an impact on all major asset classes. In equities, it creates fiscal strain and widening dispersion in stock performance. In credit, companies seeking to service or refinance debt face higher borrowing costs and tighter loan standards, leading to heightened volatility. Across commodities and currencies, volatility is also likely to remain elevated as central banks address inflation within their own economies.
While investors are still assessing the implications of a sustained period of higher rates, we believe there is a current opportunity for macro hedge fund strategies, which have historically performed best when interest rates are higher, when volatility is elevated, and often when traditional asset portfolios suffer.
Returns for macro hedge fund managers are primarily driven by large market and price movements in either direction, providing macro investors the opportunity to generate uncorrelated returns, regardless of the direction of risk assets. By capturing those return-generating opportunities, we believe macro hedge funds should continue to drive value in client portfolios.
Head of Enterprise Solutions
SPOTLIGHT: BEYOND 60/40: EPISODE 8
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Products offered by iCapital are typically private placements that are sold only to qualified clients of iCapital through transactions that are exempt from registration under the Securities Act of 1933
pursuant to Rule 506(b) of Regulation D promulgated thereunder (“Private Placements”). An investment in any product issued pursuant to a Private Placement, such as the funds described, entails a high degree of risk and no assurance can be given that any alternative investment fund’s investment objectives will be achieved or that investors will receive a return of their capital. Further, such investments are not subject to the same levels of regulatory scrutiny as publicly listed investments, and as a result, investors may have access to significantly less information than they can access with respect to publicly listed investments. Prospective investors should also note that investments in the products described involve long lock-ups and do not provide investors with liquidity.
Credit Suisse (CS) Event-Driven Index is a subset of the CS Hedge Fund (HF) Index that measures the aggregate performance of Event-Driven funds, which typically invest in various asset classes and seek to profit from potential mispricing of securities related to a specific corporate or market event. CS Global Macro Index: A subset of the CS HF Index that measures the aggregate performance of global macro funds, which typically focus on identifying extreme price valuations in equity, currency, interest rate and commodity markets. CS HF Index: An asset- weighted hedge fund index that includes funds in the CS HF Database, which tracks ~9,000 funds with a minimum of US$50 million under management, a 12-month track record, and audited financial statements. The index is calculated/rebalanced on a monthly basis and reflects performance net of all performance fees and expenses. CS Long/Short Equity Index: A subset of the CS HF Index that measures the aggregate performance of long/short equity funds, which typically invest in both long and short sides of equity markets, focusing on diversifying/hedging across particular sectors, regions, or market capitalizations. CS Multi Strategy Index: A subset of the CS HF Index that measures the aggregate performance of multi-strategy funds, which typically allocate capital based on perceived opportunities among several hedge fund strategies.
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