The Second Coming of George Soros?

Global macro hedge funds are back. The strategy, by which funds take positions based on the big-animal-pictures view of global economics rather than firm- or sector-specific factors, made George Soros an incredibly rich man 18 years ago when he used it to suck GBP 1 billion out of the British economy.

Now, in a big reversal from the cautious, small-ball strategies that have characterized these troubled times, it looks like hedge fund managers are swinging for the fences again.

Lists of the best emerging manager hedge funds are dominated by global macro. CPS-Master Private Fund, Quantedge Global Fund and GMO Global Tactical Trust are all explicitly components of the Center for International Securities and Derivatives Markets’ Global Macro Index. Newton Capital Partners also claims this strategy as their own.

Hathersage Daily Currency Program and the Fort LP funds don’t identify themselves specifically as global macro, but their core competency is in currency markets, so they too must be attuned to politics, policy, interest rate movements and international flows of funds.

What’s unclear is if this is the start of a trend, a dramatic expression of pent-up demand or just a statistical glitch. Year-to-date, the Barclay Global Macro Index traded sideways, neither gaining nor losing much more than 1% in any month. Suddenly, it surged 4.31% in September, the best monthly performance in at least five years.

Global macro dominates, but doesn’t own the market outright. Dighton Aggressive SP doesn’t claim to be anything other than a high-risk, high-reward market timer. Xenon Long/Short Global Fixed Income Program is a managed futures play focused on bonds. Hawksbill Global Diversified Program is something similar, zeroing in on fixed income arbitrage.

But while the stocks-and-bonds pedestrians are wondering whether we’re replaying the double-dip of 1937 or the return to prosperity in 1940, these high fliers are betting it’s September 16, 1992, the day Soros broke the Bank of England.

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