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Username: PrettyWoman Rating:  Asked to: Jun Wang Date Created: 17 Aug 2017 |
| Category | 47 |
| Tag | Financial |
| Question | Please give the definition of 'Macro-Hedge'. |
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Hi PrettyWoman, An investment technique used to eliminate the risk of a portfolio of assets. In most cases, this would mean taking a position that offsets the whole portfolio. But this technique is difficult in practice because there is rarely one asset that will offset the risk of a broader portfolio, so applying a macro-hedge most likely requires taking an offsetting position in each individual asset. Here's an example of a macro-hedge: an index-fund manager believes there will be a loss in the index in the upcoming period. To eliminate the risk of a downward turn in the index, the manager can take a short position in the index fund's futures market that will lock in a price for the index. |
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