Credit Suisse predicts Global macro fund revival

By Pratima Desai

LONDON (Reuters) - Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) expects a rise in financial market volatility and is ready for a revival in the fortunes of global macro funds, Nils Tuchschmid, the Swiss bank's head of multi-manager portfolios said on Tuesday.

Global macro funds make directional bets in stock, bond, currency and commodity markets on the basis of economic trends.

"You have the same stories (in financial markets) and a lot of consensus trades, and at the same time you have a lot of imbalances," Tuchschmid said.

Imbalances in the world economy include the large current account, trade and budget deficits in the United States, which many economist say are unsustainable in the longer run.

Tuchschmid said political uncertainty was another risk, and problems in one market could easily spread to others.

"We can expect dislocations which will lead to new trends in the market ... To play these trends you need global macro managers ... Credit Suisse is positioned for global macro."

Global macro managers used to dominate the hedge fund industry 15 years ago, when they controlled more than 70 percent of the assets in the industry.

They now have less than 10 percent of the $1 trillion to $1.5 trillion estimated to be invested in the industry.  Continued...