For hedge funds, the second half of 2023 is all about pouncing on the ways in which inflation, aggressive rate hikes and decarbonization are shaping the economy.
Major central banks have collectively raised rates by more than 3,750 basis points since September 2021, and while the pace has eased, the world economy has yet to feel the full effect. Five prominent funds shared their ideas using five different asset classes to trade on this uncertainty:
- UBS O’Connor: key trade is long so-called “busted” convertible bonds, or hybrid securities where the stock trades below its option conversion price
- Indus Capital Partners: long Japanese companies benefiting from B2B inflation and improvement in real wages
- Maerli Capital: buy gold
- Redhedge Asset Management: long investment grade bonds and short high-yield bonds
- Crawford Fund Management: trade idea – short weak entrants in the electric vehicle industry