Markets roiled by geopolitical tensions and diverging interest rates present money-making opportunities for the coming year, the heads of hedge funds Man Group and Brevan Howard and the Abu Dhabi Investment Council's chief investor said on Tuesday.
U.S. President Donald Trump's return to the White House and an erratic trade policy have whipsawed world markets this year, just as investors try to assess the direction of major central banks such as the U.S. Federal Reserve and Bank of Japan.
"With pain comes opportunity," Shiv Srinivasan, who oversees investing for the Abu Dhabi state-backed fund, told attendees at the Abu Dhabi Finance Week conference, noting the rising market volatility brought on by geopolitical events globally and upcoming elections.
"So we like macro strategies and those that tend to be long volatility," he said.
Srinivasan's hedge fund portfolio is up 13% so far this year, and he favours macroeconomic and trend hedge funds for 2026. "Those strategies did really well for us in 2022, along with CTAs," he said.
As stock markets plunged more than 20% in 2022, trend and macro funds returned in some cases over 40%.
CTAs, or trend funds, are systematic traders which take small positions in many asset classes to systematically find rising and falling asset prices, and buy them as they go up and sell them as they fall.
London-listed Man Group's CEO Robyn Grew, who oversees several macro and trend funds, said volatility provided good trading opportunities.
"Yes, we like a bit of volatility. Yes, we like a bit of dispersion," said Grew, who became the CEO of the $214 billion investment manager in 2023.
"Hedge funds, alternatives tend to talk about volatility providing opportunities, and I think they do," she added.
Aron Landy, the CEO of Brevan Howard, which manages more than $30 billion, said he expected global markets' differing asset values, or dispersion, to grow.
"I can't imagine any scenario where the U.S. administration turns around and declares China their new best friend," said Landy.
He added that he also saw a big opportunity in the differing value in global interest rates, as well as in cryptocurrency investing.
"Of course, it's volatile, but the biggest risk in crypto is to have no exposure at all," said Landy.
