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Global macro stars reveal best-performing ideas

Global macro stars reveal best-performing ideas

Global macro as a sector allows investors to exercise economic and political views of various countries or macroeconomic principles to inform their asset allocation.

While this top-down focus can give good overarching insights, the sector as a whole can also be challenging.

Over the three years to the end of July 2017, the average manager returned just 2.95% in euro terms, with the sector's top performers going only slightly above this return.

Citywire Selector spoke to two outperformers in the sector, François Rimeu, and Lucio Soso, to understand what had driven them to the top of the sector and hear what their best-performing ideas over the past year were.

François Rimeu

Fund: La Francaise Allocation

Total return (July 2014-July 2017): 8.77%

Citywire + rated Rimeu said his best-performing idea over the last 12 months has been to buy the Mexican peso versus the dollar.

'The currency suffered a lot around the election of Donald Trump, losing more than 15% from the end of October to the end of January.

'The market was very heavily positioned short on the peso and sentiment was terrible at that time following the talks about a wall at the border between Mexico and the United States.

'On top of that, the currency was very cheap on a real exchange rate basis. Having a contrarian investment process, we always look for this kind of opportunity with everybody on the same side of a trade.'

With the macro situation still stable in Mexico, Rimeu said the trade looked very asymmetric to the team.

‘We closed the trade during the summer after a +25% rally. Since then, we have bought Mexican bonds in local currency - currency hedged this time.

'This is as we think that inflation should come down significantly in the year to come, which should lead to more rate cuts than what the market is currently pricing.'

Lucio Soso

Fund: Bellevue F (Lux) BB Global Macro B EUR

Total return (July 2014-July 2017): 14.59%

Citywire AA-rated Soso previously said one of the biggest opportunities in the global macro sector is to take a conservative stance on government bond.

He said the strategies current success is due to the simplicity of its long-term positioning.

'The neutral portfolio to which we stray to when we do not have strong views is made of 75% government bonds and 25% equities, with a leverage of 20-50%.

'It may be counter-intuitive to be still investing in government bonds after 35 years of falling interest rates, but we have studied at length the behaviour of financial markets when interest rates rise and we are convinced that government bonds will continue playing an important role in absolute return portfolios.

'Our investors find the general behaviour of the neutrally-balanced portfolio easy to understand and they like the fact that the portfolio, made of equity indices and government bonds remains very liquid in all market phases,' he added.

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