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Macro hedge funds are enjoying their best year since at least 2008, as huge swings in the price of currencies, commodities and bonds have provided fertile conditions for traders.
An index from data provider HFR tracking the returns of such funds — which aim to profit from economic trends by trading equities, bonds and commodities — was up 16 per cent at the end of November, putting the sector on course for its most profitable year in data stretching back to 2008.
Hedge funds such as Andrew Law’s Caxton and Chris Rokos’s RCM have enjoyed returns which were well into the double digits this year, according to figures seen by the FT.
Macro managers say sharp market moves, such as the drop in the dollar triggered by Donald Trump’s trade war, a sell-off in long-term bonds, and a relentless gold rally, have offered the most favourable backdrop for the sector in many years.
“There’s plenty to work with, which doesn’t make it easy to get right,” said Ken Tropin, the founder and chair of macro fund Graham Capital, who said the firm’s discretionary portfolio managers had made most of their returns trading the dollar, gold and the US government bond market. “But at least there’s opportunity.”
Tropin said these portfolio managers relied on so-called “tactical”, or short-term, trading strategies this year, so that they could move quickly in asset classes such as currencies which were volatile in 2025.
While that approach started before the Trump administration unveiled broad tariffs in April, Tropin added, “that was really the wake-up call for everybody”.
Macro funds made money both by shorting the dollar, but also by piling into emerging market currencies and bonds, which rallied as a weaker dollar allowed countries to lower interest rates and refinance their debt more cheaply.
“Every underlying asset class like commodities, FX and bonds had great opportunities this past year,” said an executive at a large European family office that invests in hedge funds. “There was the exuberance in gold and precious metals, the bear market in US dollar, and the divergence between the actions of central banks including the Bank of England and Federal Reserve.”
The strong returns extend a renaissance for the sector which struggled during the decade of very low interest rates and muted volatility that followed the global financial crisis of 2008-9.
“If you didn’t make money this year as a macro fund it will be difficult to explain,” said one hedge fund executive in the sector.
Some funds also profited from a sell-off in long-term bonds driven by worries over excessive government borrowing in big economies, by betting on a growing gap between short-term and long-term borrowing costs.
Caxton and Graham both made money from such “steepener” trades, while Caxton also profited from rallies in gold and copper, according to people familiar with the funds’ performances. Caxton’s Global, the firm’s main fund which manages $10bn, was up 14 per cent to December 5, according to an investor, while Caxton Macro, the $9bn fund run personally by Law, was up 18 per cent.
The Absolute Return and Multi-Alpha Opportunity funds at Graham were up 8 and 13 per cent respectively at the end of November, according to people familiar with the figures. Rokos made 17.5 per cent up to the end of November, according to another person who had seen the numbers.
Greg Coffey, the Australian hedge fund star once nicknamed the “Wizard of Oz”, has emerged as one of the biggest winners this year. The flagship fund at his firm Kirkoswald Capital has made 21 per cent by mid-December, according to people familiar with the figures.
Both Graham and Rokos snapped up UK government debt when long-term borrowing costs soared to their highest levels this century, profiting as gilts rallied and yields fell back, according to people familiar with the trades.
Brevan Howard had a more mixed performance. Its Master Fund was up just 0.4 per cent as of the end of November, while its multi-manager fund Alpha Strategies, which uses a variety of investment approaches, was up 7.2 per cent over the same period, according to people familiar with the returns.
Brevan, Rokos, Caxton and Kirkoswald all declined to comment.
