The writer is founder and chair of Graham Capital Management and chair of the Robin Hood Foundation

To understand why macro investing is now on the mind of many investors, it makes sense to spend a moment reflecting on the history of this strategy. In the eighties, at more or less the start of the hedge fund industry, the most prominent managers were legendary discretionary macro traders like Paul Tudor Jones, Louis Bacon, Bruce Kovner, and Stan Druckenmiller. Their returns were terrific and they had low correlation to beta, or the overall market trend. In my opinion, that’s why they were called hedge funds.

The industry gradually evolved into many diverse sectors of the markets and by the late nineties, “l(fā)ong-short” equity funds were the dominant style in the industry. While most of these funds were characterised by having both long and short positions that bet on both price rises and falls, their returns were pretty correlated to the equity markets. This reflected what was typically a residual net long exposure.