What is 'Macro-Hedge'
An investment technique used to eliminate the risk of a portfolio of assets. In most cases, this would mean taking a position that offsets the whole portfolio. But this technique is difficult in practice because there is rarely one asset that will offset the risk of a broader portfolio, so applying a macro-hedge most likely requires taking an offsetting position in each individual asset.
Explaining 'Macro-Hedge'
Here's an example of a macro-hedge: an index-fund manager believes there will be a loss in the index in the upcoming period. To eliminate the risk of a downward turn in the index, the manager can take a short position in the index fund's futures market that will lock in a price for the index.
Further Reading
Chapter 3 Dynamic Linkages between Global Macro Hedge Funds and Traditional Financial Assets'www.emerald.com [PDF]… in the wake of the 1997 turbulence in Asian currency markets, its remit is broader: it considers not just “macro” hedge funds that take positions in currency markets on the basis of their assessment of current and prospective macro- economic and financial fundamentals, but the …
Hedge fund and commodity fund investments in bull and bear marketsjpm.pm-research.com [PDF]… in the wake of the 1997 turbulence in Asian currency markets, its remit is broader: it considers not just “macro” hedge funds that take positions in currency markets on the basis of their assessment of current and prospective macro- economic and financial fundamentals, but the …
Estimating hedge fund leveragepapers.ssrn.com [PDF]… in the wake of the 1997 turbulence in Asian currency markets, its remit is broader: it considers not just “macro” hedge funds that take positions in currency markets on the basis of their assessment of current and prospective macro- economic and financial fundamentals, but the …
The law and economics of hedge funds: Financial innovation and investor protectionheinonline.org [PDF]… in the wake of the 1997 turbulence in Asian currency markets, its remit is broader: it considers not just “macro” hedge funds that take positions in currency markets on the basis of their assessment of current and prospective macro- economic and financial fundamentals, but the …
Measuring the market impact of hedge fundswww.sciencedirect.com [PDF]… in the wake of the 1997 turbulence in Asian currency markets, its remit is broader: it considers not just “macro” hedge funds that take positions in currency markets on the basis of their assessment of current and prospective macro- economic and financial fundamentals, but the …
The trouble with hedge fundsonlinelibrary.wiley.com [PDF]… in the wake of the 1997 turbulence in Asian currency markets, its remit is broader: it considers not just “macro” hedge funds that take positions in currency markets on the basis of their assessment of current and prospective macro- economic and financial fundamentals, but the …