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Watch and Wait on Most Global Macro Funds

Many held up well after the Brexit vote, but we urge caution since returns over the past few years have been mediocre.

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Josh Charlson: Global macro funds give their managers wide latitude to invest long and short across asset classes and global regions, and they can shift their portfolios around quickly to take advantage of opportunities. They typically use very liquid derivatives to implement their trades, which makes it easier to make quick changes. But the use of derivatives and quick-changing nature of their portfolios makes it hard for an investor to know exactly how a global macro fund is positioned at any given moment.

That makes the Brexit event a good moment to check in on these funds. Global macro managers often claim that they thrive when there's a lot of dispersion in markets, and as alternative strategies they are typically designed to provide investors with diversification from traditional asset classes.

Josh Charlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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