Hi,
I’m Howard, and I’m a global macro fund manager at a large fund you may or may not have heard of. In this blog post, I’m going to share with you a day in the life of my job and give you a glimpse of what it’s like to invest in global markets across different asset classes and regions. I hope you find it interesting and informative, or at least mildly amusing. Like any good story some of it might even be true.
As a global macro fund manager, I have a broad mandate to invest across different asset classes, regions and strategies. My ultimate responsibility is to help my clients achieve their objectives, which are typically capital appreciation with a low correlation to equity markets. This might sound alien to you, but it quite simple, it means that I aim to generate positive returns for my clients regardless of the direction of the stock market. I attempt to do this by taking advantage of the opportunities and risks that arise from macroeconomic and geopolitical events. For example, in 2020, when the COVID-19 pandemic caused a global recession and a sharp sell-off in equities, I was able to hedge my portfolio by increasing my exposure to safe-haven assets such as gold and government bonds, as well as taking short positions in sectors that were most affected by the lockdowns, such as travel and leisure. By doing so, I was able to protect my clients’ capital and outperform the market during a challenging period.
My other goals are personal: to better understand the nature of the markets, which are like a giant 4-dimensional jigsaw puzzle. We have the pieces, but we don’t really know what the picture should look like. And sometimes the pieces change shape or colour without warning.
How do I decide which markets and assets to invest in? I start by building macro themes. These can concern what central banks might do with interest rates, or they can be about geopolitics, such as what is going to happen with Russia’s invasion of Ukraine or will China invade Taiwan. I try to set a central scenario and risk scenarios, and make sure my portfolio makes money in the central scenarios and is robust to the others. I have very few restrictions on what I can invest in, but I am very selective and disciplined in choosing the best opportunities.
What are some of the sources of information and inspiration that I use to generate ideas? I use a vast array of information sources - the more the better. It can be Bloomberg, Reuters or investment bank research. It can be a conversation with a colleague about something we heard a central bank like Powell say or a conversation with a bond manager about what he thinks the Bank of England will do next. I also take inspiration and guidance from independent research providers that might specialise in policy or geopolitical research. My aim is to select high quality, high signal-to-noise inputs and focus on these. I also like to find people that disagree with me and challenge me - it helps me test my assumptions and avoid confirmation bias.
How do I measure and manage the risk of my portfolio? Risk is very important to me. I want to understand in detail all the interactions in my portfolio, not just the risk of one idea but how it impacts my portfolio. My process is fundamentally driven but highly systematic and quantitative on the risk side. I use various tools and models to assess the risk of each position and the overall portfolio. I also have a risk management team that monitors and advises me on the risk exposure. I also use various scenarios and stress tests to evaluate how my portfolio would perform under different market conditions. I always have a plan B and C in case things go wrong. I hate the phrase but its true fail to plan, plan to fail, you really cannot spend too much time on tactics in this job.
What are some of the skills and qualities that I need to succeed in this field? A thick skin, a sense of humour, the ability to make decisions quickly with limited information, discipline, humility but also confidence. You need to be curious; you need to want to understand things, ask why a lot, then ask why again. Don’t be afraid to be wrong because you will be, you will be wrong a lot its worth saying that twice. Be greedy like a pig when you see a good idea, but don’t be a sheep and follow the herd. Understand that if you don’t know who the fool is in the market, it’s probably you. Be able to enjoy yourself but don’t lose control, oh and remember you will be wrong, you will make mistakes, the more mistakes the better assuming they don’t cost you your job because that’s how you learn.
What are some of the challenges and opportunities that I face in my job? It’s hard to predict the future. You will work with great people and terrible people. Management will never really get you. Each day is different. You will have long periods of losing but you are also at risk of making bad decisions when winning. Every broker is your friend, but you can trust no one. On the other hand, you will also have opportunities to learn new things, discover new trends, and make an impact. You will have moments of satisfaction and joy when you get things right or help someone else grow. You will have fun and excitement along the way. If you drink you will get drunk a lot, and someone else will pay for it, but remember control, you don’t want to be the guy checking NKY vol at 9am while still drunk. Don’t be that guy remember to have fun but know when to go home.
So, what does a typical day look like for me? Well, there is no such thing as a typical day in this job, but I’ll try to give you an example of how a day might go.
6:00 am: I wake up and check my phone for any overnight news or market movements that might affect my portfolio. I also check my emails and messages from my colleagues and brokers. I quickly scan the headlines and summaries of the most relevant sources.
So, let me take you through a typical day of mine, let’s say it was last Thursday, it wasn’t but it could have been!
7:00 am: I wake up and check my phone. I see a breaking news alert that the People’s Bank of China (PBOC) has unexpectedly raised its benchmark interest rate by 25 basis points. This is a shock to the market, as most analysts were expecting no change or even a cut. The news sends the Chinese yuan higher against the dollar and stocks tumbling, while the broad US dollar and Treasury yields gain. I quickly get dressed and head to the office. Cursing the guy that convinced me Fernet Branca was a good nightcap at 3am.
8:00 am: I arrive at the office and have a quick meeting with my team of analysts and traders. We discuss the overnight market developments and our current positions. We have a long exposure to US equities, a short exposure to European bonds, and a long exposure to gold. We also have some bets on various currency pairs, such as long USD/JPY and short EUR/GBP, along with various relative value vol bets. We review our risk metrics and performance attribution, and we agree on some adjustments to our portfolio. We decide to reduce our exposure to emerging markets as higher global rates may see flows out of EM debt and into DM, we also increase our exposure to RMB vol.
9:00 am: I check my emails and messages. I see that one of my clients, a large pension fund, has sent me an angry email complaining about the performance of their portfolio. They are unhappy with the losses I incurred in some emerging market bonds and currencies, and they want me to explain my rationale and outlook. They also threaten to redeem their money if I don’t improve the results soon. I sigh and make a mental note to call them later. I wonder why a client with a time horizon of 20 years cares about what happened last week but I guess they need to make it look like they add some value.
10:00 am: I start working on a presentation for a potential new client, who is interested in investing in my fund. I outline my investment philosophy, process, and strategy, and I highlight some of my past successes and failures. I also include some charts and tables to illustrate my views on the current market environment and opportunities. I hand it off to my junior analyst who is frighteningly bright but also terribly overconfident. A bit of PowerPoint drudgery will build character.
11:00 am: I finish working on my presentation, well actually my junior did and send it to my sales team for review. They give me some feedback and suggestions for improvement. I ignore it because I’m the one presenting not them and I don’t really know what their job is aside from introducing me and making the coffee. They also tell me that they have scheduled a meeting with the potential new client for next week. So, some value add I guess there.
12:00 pm: I get a phone call from one of my favourite brokers, who invites me to join him for lunch with a well-known economist. He says the economist has some interesting insights on the global economy and monetary policy, and he thinks I might find them useful for my macro themes. I admire his tact, what he really means is its been a while since we caught up and its been ages since I have been to Goodman’s lets go have a massive steak and drink expensive wine, the economist is an MD so he can get the check.
1:00 pm: I meet with the broker and the economist at a nice restaurant near my office. We order steak rare plus family style, truffle fries, mac n cheese and wine, I wonder then the diet will start…not today anyway…We start chatting about the markets. The economist shares his views on the PBOC move, the US inflation outlook, the European recovery prospects, and the geopolitical risks in Asia and Europe. He also gives me some tips on how to interpret some of the economic indicators and data releases that he follows closely. This is all standard stuff I typically prefer meeting traders because they have their finger on the pulse of the market and tend to be less pedantic but hey, guys gotta eat.
2:00 pm: The lunch is going well, but I find the economist a bit dull and serious. He seems more interested in showing off his knowledge than in engaging in a lively discussion. He also keeps interrupting me when I try to ask him some questions or challenge his assumptions. I try to be polite and respectful, but I also feel bored and annoyed.
3:00 pm: We finish our lunch and say goodbye to each other. The broker pays the bill, which is quite hefty. He tells me that he enjoyed the lunch and hopes that I found it useful. He also says that he has some more ideas for me that he will send me later, he ask’s me could he maybe bring the economist in to present to my bosses as it would him internally. I smile and start to understand what the lunch was all about but that’s fine, that’s the way the world works. I agree and he’s happy, relationship intact we part company.
4:00 pm: I return to the office and check the markets again. I see that oil prices have fallen sharply due to an unexpected increase in US inventories and a slowdown in global demand growth. This affects some of my positions in energy stocks and commodities currencies. I call my team again and we discuss how or if to react to this new development. Sometimes these things can be noise and are better ignored sometimes it’s a signal something is changing somewhere.
5:00 pm: I have another phone call with my angry client. I try to calm them down, I think maybe I shouldn’t have had that final Gin and Tonic, oh well my candour seems to have worked they seem calmer or maybe they are just confused. At this point in the day, I really don’t care.
6:00 pm: I start working on the report that I promised to send to my angry client. I go over the details of their portfolio and explain the sources of return and risk. I also provide some scenarios and forecasts for their expected performance in different market conditions. I try to be honest and transparent, but also optimistic and confident. Actually, I tell my Junior to do this, I go to the pub to meet my other broker, we discuss the day’s events, who is doing what, who did well and who got run over. I enjoy the gossip, but I secretly wonder what he says about me behind my back. Trust no one.
7:00 pm: My analyst finishes working on the report and sends it to the client. I hope that they will read it carefully, more importantly I hope the analyst read it carefully because I am in no state to proof read anything at this point. I also hope that they will not redeem their money, as they are one of my biggest and oldest clients.
8:00 pm: I pack up my things and get ready to leave the pub, I think about getting the tube but Waterloo is depressing at this time of the night, I order and Uber exec instead. I check the markets one last time and see that they have stabilized a bit after a turbulent day. I feel a mix of relief and exhaustion. I also feel a pang of anxiety and doubt. Did I make the right decisions today? Did I miss any opportunities or risks? Could I have done better, should I have skipped the pub and went to the gym.
9:00 pm: I arrive home and greet my wife and kids. They are happy to see me, but they also complain that I am late and that I have been ignoring them lately. They say that I work too much and that I don’t spend enough time with them. They ask me how my day was, but they don’t seem very interested in what I have to say. They tell me about their own day, but they don’t seem very excited or passionate about what they do.
10:00 pm: I put the sprogs to bed have supper together with my wife and watch some TV. We try to have some conversation, but we mostly talk about trivial things. We don’t share any deep thoughts or feelings. We don’t laugh or cry. We don’t hug or kiss. We just coexist.
This is a fictional day in the life of a global macro fund manager, ones that’s maybe sailing a bit close to the wind, brilliant but flawed, it might sound like a short story but its closer to the truth than many will think. It’s not always like this, of course. Sometimes it’s better, sometimes it’s worse. Sometimes it’s rewarding, sometimes it’s frustrating. Sometimes it’s fun, sometimes it’s boring.
But it’s always challenging, always stimulating, always fascinating.
And that’s why I love it.
And that’s why I hate it.
And that’s why I can’t quit.
At least not yet.
I’m Howard, and I’m a global macro fund manager at a large fund you may or may not have heard of. In this blog post, I’m going to share with you a day in the life of my job and give you a glimpse of what it’s like to invest in global markets across different asset classes and regions. I hope you find it interesting and informative, or at least mildly amusing. Like any good story some of it might even be true.
As a global macro fund manager, I have a broad mandate to invest across different asset classes, regions and strategies. My ultimate responsibility is to help my clients achieve their objectives, which are typically capital appreciation with a low correlation to equity markets. This might sound alien to you, but it quite simple, it means that I aim to generate positive returns for my clients regardless of the direction of the stock market. I attempt to do this by taking advantage of the opportunities and risks that arise from macroeconomic and geopolitical events. For example, in 2020, when the COVID-19 pandemic caused a global recession and a sharp sell-off in equities, I was able to hedge my portfolio by increasing my exposure to safe-haven assets such as gold and government bonds, as well as taking short positions in sectors that were most affected by the lockdowns, such as travel and leisure. By doing so, I was able to protect my clients’ capital and outperform the market during a challenging period.
My other goals are personal: to better understand the nature of the markets, which are like a giant 4-dimensional jigsaw puzzle. We have the pieces, but we don’t really know what the picture should look like. And sometimes the pieces change shape or colour without warning.
How do I decide which markets and assets to invest in? I start by building macro themes. These can concern what central banks might do with interest rates, or they can be about geopolitics, such as what is going to happen with Russia’s invasion of Ukraine or will China invade Taiwan. I try to set a central scenario and risk scenarios, and make sure my portfolio makes money in the central scenarios and is robust to the others. I have very few restrictions on what I can invest in, but I am very selective and disciplined in choosing the best opportunities.
What are some of the sources of information and inspiration that I use to generate ideas? I use a vast array of information sources - the more the better. It can be Bloomberg, Reuters or investment bank research. It can be a conversation with a colleague about something we heard a central bank like Powell say or a conversation with a bond manager about what he thinks the Bank of England will do next. I also take inspiration and guidance from independent research providers that might specialise in policy or geopolitical research. My aim is to select high quality, high signal-to-noise inputs and focus on these. I also like to find people that disagree with me and challenge me - it helps me test my assumptions and avoid confirmation bias.
How do I measure and manage the risk of my portfolio? Risk is very important to me. I want to understand in detail all the interactions in my portfolio, not just the risk of one idea but how it impacts my portfolio. My process is fundamentally driven but highly systematic and quantitative on the risk side. I use various tools and models to assess the risk of each position and the overall portfolio. I also have a risk management team that monitors and advises me on the risk exposure. I also use various scenarios and stress tests to evaluate how my portfolio would perform under different market conditions. I always have a plan B and C in case things go wrong. I hate the phrase but its true fail to plan, plan to fail, you really cannot spend too much time on tactics in this job.
What are some of the skills and qualities that I need to succeed in this field? A thick skin, a sense of humour, the ability to make decisions quickly with limited information, discipline, humility but also confidence. You need to be curious; you need to want to understand things, ask why a lot, then ask why again. Don’t be afraid to be wrong because you will be, you will be wrong a lot its worth saying that twice. Be greedy like a pig when you see a good idea, but don’t be a sheep and follow the herd. Understand that if you don’t know who the fool is in the market, it’s probably you. Be able to enjoy yourself but don’t lose control, oh and remember you will be wrong, you will make mistakes, the more mistakes the better assuming they don’t cost you your job because that’s how you learn.
What are some of the challenges and opportunities that I face in my job? It’s hard to predict the future. You will work with great people and terrible people. Management will never really get you. Each day is different. You will have long periods of losing but you are also at risk of making bad decisions when winning. Every broker is your friend, but you can trust no one. On the other hand, you will also have opportunities to learn new things, discover new trends, and make an impact. You will have moments of satisfaction and joy when you get things right or help someone else grow. You will have fun and excitement along the way. If you drink you will get drunk a lot, and someone else will pay for it, but remember control, you don’t want to be the guy checking NKY vol at 9am while still drunk. Don’t be that guy remember to have fun but know when to go home.
So, what does a typical day look like for me? Well, there is no such thing as a typical day in this job, but I’ll try to give you an example of how a day might go.
6:00 am: I wake up and check my phone for any overnight news or market movements that might affect my portfolio. I also check my emails and messages from my colleagues and brokers. I quickly scan the headlines and summaries of the most relevant sources.
So, let me take you through a typical day of mine, let’s say it was last Thursday, it wasn’t but it could have been!
7:00 am: I wake up and check my phone. I see a breaking news alert that the People’s Bank of China (PBOC) has unexpectedly raised its benchmark interest rate by 25 basis points. This is a shock to the market, as most analysts were expecting no change or even a cut. The news sends the Chinese yuan higher against the dollar and stocks tumbling, while the broad US dollar and Treasury yields gain. I quickly get dressed and head to the office. Cursing the guy that convinced me Fernet Branca was a good nightcap at 3am.
8:00 am: I arrive at the office and have a quick meeting with my team of analysts and traders. We discuss the overnight market developments and our current positions. We have a long exposure to US equities, a short exposure to European bonds, and a long exposure to gold. We also have some bets on various currency pairs, such as long USD/JPY and short EUR/GBP, along with various relative value vol bets. We review our risk metrics and performance attribution, and we agree on some adjustments to our portfolio. We decide to reduce our exposure to emerging markets as higher global rates may see flows out of EM debt and into DM, we also increase our exposure to RMB vol.
9:00 am: I check my emails and messages. I see that one of my clients, a large pension fund, has sent me an angry email complaining about the performance of their portfolio. They are unhappy with the losses I incurred in some emerging market bonds and currencies, and they want me to explain my rationale and outlook. They also threaten to redeem their money if I don’t improve the results soon. I sigh and make a mental note to call them later. I wonder why a client with a time horizon of 20 years cares about what happened last week but I guess they need to make it look like they add some value.
10:00 am: I start working on a presentation for a potential new client, who is interested in investing in my fund. I outline my investment philosophy, process, and strategy, and I highlight some of my past successes and failures. I also include some charts and tables to illustrate my views on the current market environment and opportunities. I hand it off to my junior analyst who is frighteningly bright but also terribly overconfident. A bit of PowerPoint drudgery will build character.
11:00 am: I finish working on my presentation, well actually my junior did and send it to my sales team for review. They give me some feedback and suggestions for improvement. I ignore it because I’m the one presenting not them and I don’t really know what their job is aside from introducing me and making the coffee. They also tell me that they have scheduled a meeting with the potential new client for next week. So, some value add I guess there.
12:00 pm: I get a phone call from one of my favourite brokers, who invites me to join him for lunch with a well-known economist. He says the economist has some interesting insights on the global economy and monetary policy, and he thinks I might find them useful for my macro themes. I admire his tact, what he really means is its been a while since we caught up and its been ages since I have been to Goodman’s lets go have a massive steak and drink expensive wine, the economist is an MD so he can get the check.
1:00 pm: I meet with the broker and the economist at a nice restaurant near my office. We order steak rare plus family style, truffle fries, mac n cheese and wine, I wonder then the diet will start…not today anyway…We start chatting about the markets. The economist shares his views on the PBOC move, the US inflation outlook, the European recovery prospects, and the geopolitical risks in Asia and Europe. He also gives me some tips on how to interpret some of the economic indicators and data releases that he follows closely. This is all standard stuff I typically prefer meeting traders because they have their finger on the pulse of the market and tend to be less pedantic but hey, guys gotta eat.
2:00 pm: The lunch is going well, but I find the economist a bit dull and serious. He seems more interested in showing off his knowledge than in engaging in a lively discussion. He also keeps interrupting me when I try to ask him some questions or challenge his assumptions. I try to be polite and respectful, but I also feel bored and annoyed.
3:00 pm: We finish our lunch and say goodbye to each other. The broker pays the bill, which is quite hefty. He tells me that he enjoyed the lunch and hopes that I found it useful. He also says that he has some more ideas for me that he will send me later, he ask’s me could he maybe bring the economist in to present to my bosses as it would him internally. I smile and start to understand what the lunch was all about but that’s fine, that’s the way the world works. I agree and he’s happy, relationship intact we part company.
4:00 pm: I return to the office and check the markets again. I see that oil prices have fallen sharply due to an unexpected increase in US inventories and a slowdown in global demand growth. This affects some of my positions in energy stocks and commodities currencies. I call my team again and we discuss how or if to react to this new development. Sometimes these things can be noise and are better ignored sometimes it’s a signal something is changing somewhere.
5:00 pm: I have another phone call with my angry client. I try to calm them down, I think maybe I shouldn’t have had that final Gin and Tonic, oh well my candour seems to have worked they seem calmer or maybe they are just confused. At this point in the day, I really don’t care.
6:00 pm: I start working on the report that I promised to send to my angry client. I go over the details of their portfolio and explain the sources of return and risk. I also provide some scenarios and forecasts for their expected performance in different market conditions. I try to be honest and transparent, but also optimistic and confident. Actually, I tell my Junior to do this, I go to the pub to meet my other broker, we discuss the day’s events, who is doing what, who did well and who got run over. I enjoy the gossip, but I secretly wonder what he says about me behind my back. Trust no one.
7:00 pm: My analyst finishes working on the report and sends it to the client. I hope that they will read it carefully, more importantly I hope the analyst read it carefully because I am in no state to proof read anything at this point. I also hope that they will not redeem their money, as they are one of my biggest and oldest clients.
8:00 pm: I pack up my things and get ready to leave the pub, I think about getting the tube but Waterloo is depressing at this time of the night, I order and Uber exec instead. I check the markets one last time and see that they have stabilized a bit after a turbulent day. I feel a mix of relief and exhaustion. I also feel a pang of anxiety and doubt. Did I make the right decisions today? Did I miss any opportunities or risks? Could I have done better, should I have skipped the pub and went to the gym.
9:00 pm: I arrive home and greet my wife and kids. They are happy to see me, but they also complain that I am late and that I have been ignoring them lately. They say that I work too much and that I don’t spend enough time with them. They ask me how my day was, but they don’t seem very interested in what I have to say. They tell me about their own day, but they don’t seem very excited or passionate about what they do.
10:00 pm: I put the sprogs to bed have supper together with my wife and watch some TV. We try to have some conversation, but we mostly talk about trivial things. We don’t share any deep thoughts or feelings. We don’t laugh or cry. We don’t hug or kiss. We just coexist.
This is a fictional day in the life of a global macro fund manager, ones that’s maybe sailing a bit close to the wind, brilliant but flawed, it might sound like a short story but its closer to the truth than many will think. It’s not always like this, of course. Sometimes it’s better, sometimes it’s worse. Sometimes it’s rewarding, sometimes it’s frustrating. Sometimes it’s fun, sometimes it’s boring.
But it’s always challenging, always stimulating, always fascinating.
And that’s why I love it.
And that’s why I hate it.
And that’s why I can’t quit.
At least not yet.