Systematic macro styles such as trend-following saw renewed interest in 2022 after delivering strong performance in a year when many traditional investments underperformed.
The ability to benefit from declines in both equities and fixed income, as well as strong trends in commodities and FX, all contributed to strong performance.
We should note that making confident speculation about the future is somewhat antithetical to a systematic approach. However, looking forward to 2023, we think many of these key themes are likely to stay relevant. The invasion of Ukraine continues to play out in higher and more volatile energy prices and the outlook for rates and equities going forward remains uncertain. These uncertainties generally favour the strengths of a systematic approach, which can react incrementally to market developments as they emerge and manage positioning and risk appropriately. The ability to identify and harvest opportunities across a broad and diverse traded universe will also be important.
Differences in funding mechanics are also likely to see increased scrutiny as global rates continue to rise. Since systematic macro investments are typically paid on margin, it is helpful to hold the majority of AUM in cash or other instruments that will benefit from increases in the risk-free rate, in contrast to styles that require full funding.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not a reliable indicator of future results or current or future trends. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. There is no guarantee that forecasts will be realised.