Interview with Tom Roderick, Founder of Trium Capital in Hedge Funds Discussion
In an unpredictable global economy, macro hedge funds are adapting their strategies to seize opportunities in both emerging and developed markets. The Trium Epynt Macro Fund, led by Portfolio Manager Tom Roderick, is one such fund that is repositioning itself in response to changing economic conditions.
The Trium Epynt Macro Fund, with its objective of providing investors with a positive return stream uncorrelated to other portfolio components, has been long in carbon emissions markets in the EU. Roderick views higher prices as a means to incentivize decarbonisation spending, a long-term investment in the energy transition trade that the portfolio has been playing for several years. However, the fund has also adopted a long/short trading strategy, balancing long-term stories with shorter-term supply and demand dynamics.
In emerging markets, macro hedge funds often view countries like China and India as offering higher potential returns due to lower valuations and growth opportunities. The Trium Epynt Macro Fund, for instance, has become more optimistic towards China, with a favour for long-term call options on domestic indices. This shift is partly due to the reversal of Covid lockdowns, suppression of the tech sector, and the housing collapse in China, making the country's equities more investable.
In developed markets, such as the U.S. and Europe, funds typically focus on sectors with strong fundamentals or those benefiting from global trends like technology advancements. The Trium Epynt Macro Fund, for example, has also focused on commodity markets, including uranium, during the transition to renewables.
In uncertain times, risk management becomes paramount. Macro hedge funds prioritize diversifying portfolios to mitigate potential losses and leverage strategies like market-neutral or multi-strategy approaches to balance risk. The Trium Epynt Macro Fund, for instance, divides its book between developed markets, emerging markets, and China, with a cautious allocation to idiosyncratic themes within emerging markets.
Discretionary macro funds, like the Trium Epynt Macro Fund, trade a wide range of instruments but have a different process to identify trades compared to CTAs. These funds can be more aggressive in capitalizing on structural shifts, particularly during times of instability and chaos. The portfolio has been long Argentine assets, with the Milei administration enjoying good fortune as they work towards an IMF agreement and the eventual return of international investors.
The fund's view on inflation has started to change, partly due to major cuts to the Biden-era 'green' spending commitments in the U.S. Decarbonisation, an inherently inflationary endeavour involving huge spending with no short-term economic gain, may not have the same impact as initially anticipated.
As the global economy continues to grapple with significant macroeconomic and geopolitical changes, macro hedge funds will undoubtedly continue to adapt their strategies to navigate uncertainty and achieve returns.
The Trium Epynt Macro Fund, being focused on providing uncorrelated returns to other portfolio components, has been capitalizing on both emerging and developed markets. Roderick, the fund's portfolio manager, has actively invested in carbon emissions markets in the EU and domestic indices of China, while also adopting a long/short trading strategy for balance. Furthermore, the fund has taken positions in commodity markets like uranium, highlighting their interest in sectors benefiting from global trends.
