To answer the question "what are global macro hedge funds?" we first have to define global macro. Global macro is an investment and trading style that allows and in fact encourages and requires the fund manager to look at everything and see how it all connects. Once you have found the connections you need to figure out how to profit from it.

For instance if you are looking at the Australian Dollar and the New Zealand Kiwi you can make a judgement over which currency is stronger and which is weaker. You can then go long one and short the other as their economies are very closely related.

Another popular macro trade the last ten years has been that of going short some of the EU European Union countries long bonds and going long the bonds of a country that is about to be accepted into the EU. By doing this you can earn the spread when the rates for the new country drop and the rate for the current members goes up a bit due to a less credit worthy member coming into the EU.

As we all know now in 2007 adn 2008 one of the best trades was to go short housing and financial related stocks and bonds and going long US Treasuries. If you saw that housing bubble you would have been able to execute the trade with a variety of tradeable securities to best express your view.

Essentially Global Macro Hedge Funds are just good capitalists looking for the best risk to reward situations that they can find. For this reason they can be some of the absolute best funds in times of crisis. Instead of thinking that they need to be invested like the typical mutual fund manager, the global macro fund can go to cash or go short what everyone is going long. Global macro funds thrive on the freedom they get by being macro traders.