The investment world has become a tumultuous place. In China, stocks lost nearly 30% of their value in less than a month, and despite the heavy-handed interventions of the Communist government, the country’s stock markets appear to be on the ropes again. Oil prices also slid close to 30% in July, while the yield on the 10-year Treasury bond has bounced between 2.2% and 2.5%, often with major moves happening in a single day. Add in the ongoing Greek debt crisis, which is far from being resolved, and it’s understandable why stocks and bonds have been increasingly volatile investments in 2015 – and why investors are looking to alternative strategies to hedge against downside risk.
Global macro strategies, which seek to capitalize on the inefficiencies in long-term macroeconomic cycles, can be particularly attractive in this environment. These strategies aim to generate returns by taking long and short positions, typically using futures contracts, in global markets across asset classes: equity indexes, government bonds, currencies, and commodities. “Systematic macro” is a particular kind of global macro strategy, involving rules-based factor exposures, trend-following and counter-trend trading, rather than relying on the discretion of a portfolio manager, and investors seeking exposure to systematic macro strategies have one new option from Equinox Funds as of July 6: the Equinox IPM Systematic Macro Fund (EQIPX).
The Equinox IPM Systematic Macro Fund pursues its investment objective of long-term capital appreciation by employing two sub-strategies: The first involves investing directly in an actively managed fixed-income portfolio consisting of cash, cash equivalents, money market funds, and U.S. Treasury debt with one year or less to maturity; while the second involves investing directly or indirectly through a subsidiary in futures contracts and other related securities. The indirect investments are managed by IPM Informed Portfolio Management AB in accordance with its Systematic Macro Trading Program, also known as the IPM Program.
The IPM Program attempts to build a diversified portfolio of futures contracts consisting of a large number of uncorrelated investment ideas based on four broad fundamental themes:
- Value themes designed to take advantage of discrepancies between market value and longer-term “intrinsic” value;
- Risk premia themes designed to exploit the time-varying nature of investment opportunities and returns;
- Macroeconomic themes based on economic, political, and/or financial trends; and
- Market dynamic themes focused on investment flows, interest rate volatility, and other attributes.
If the fund sounds good, be prepared to make a large investment: Shares are available in I-class only with a 1.89% net-expense ratio and a minimum initial investment of $200 million.
For more information, read the fund’s prospectus.