Hedge Funds Turn to Macro Strategies Amid Market Volatility in 2025

Hedge fund investors are prioritizing macro strategies for 2025, driven by anticipated political and economic turbulence under the incoming U.S. administration. President-elect Donald Trump’s policies, particularly tariff hikes, are expected to impact global markets, weakening currencies like the Chinese yuan and euro while stoking inflation. Hedge fund managers, such as Craig Bergstrom of Corbin Capital Partners, view this volatile landscape as an opportunity to capitalize on shifts in fiscal and monetary policy, especially in response to developments from central banks like the Federal Reserve and the Bank of Japan.

Despite cryptocurrency hedge funds delivering a stellar 24.5% annualized return in 2024, macro strategies are now the top choice for institutional investors. A survey by Societe Generale revealed that 40% of investment firms plan to allocate to macro-focused funds in 2025, while interest in crypto has waned significantly. Trading in commodities and equities is also gaining traction as second and third choices, respectively, while government bond trading continues to lose appeal amid shifting inflation dynamics.

Experts highlight the $7.5 trillion-a-day currency market as a key focus for hedge funds, with major opportunities anticipated in forex trading. Jordan Brooks of AQR noted that inflationary pressures are becoming more balanced, introducing uncertainties across investment themes. Hedge funds are thus preparing for another year of market swings, aiming to leverage macroeconomic trends and geopolitical developments to deliver returns.