The managers visited were Macro and Equity managers.

In the past decade, hedge funds delivered muted returns, as central banks’ low-cost liquidity kept volatility subdued. In contrast, today’s higher-rate, higher-volatility environment is expected to restore their value proposition by creating more alpha opportunities.

Discretionary macro strategies appear particularly attractive in a setting of elevated rates, persistent inflation, and geopolitical uncertainty, as they can extract alpha from commodities, rates, and FX dislocations.

European equity markets have performed strongly YTD, with European rearmament and increased defence spending emerging as key secular growth themes.

Meanwhile, US budget deficits running above 6% and an imminent debt-ceiling showdown are likely to push Treasury yields higher, prompting investors to demand higher risk premia.

Despite political and policy uncertainty in the US, strong corporate fundamentals and consumer spending support expectations that a formal recession will likely be avoided in 2025.