Introduction

Listening to market commentary can often feel like trying to follow a swirl of competing signals: policy rates, inflation, global trade, earnings seasons, capital expenditure plans, wage negotiations, government policy etc. It may sound as though every new statistic must somehow explain that day’s market move. We wanted to step away from that noise and so recently, we conducted a survey among our equity managers asking how macroeconomic views show up in their portfolios. In this article we provide insights into our findings.

Same macro signal…different applications

Take a simple inflation print. For a central bank, it feeds into a decision on interest rates to spur or curb economic conditions. For a company, it could show up as changes in funding costs or consumer demand. And a bottom-up manager using a fundamental analysis approach, might translate that same signal into revised assumptions for margins, debt servicing or sector risks. For such a manager, identifying where the impact will land and how material it might be if it persists, often matters more than predicting the next inflation or interest rate print.

GDP works the same way. The number itself is the sum of thousands of firms hiring, producing and selling. For statisticians and policymakers, it is a score card for the health of the overall economy. For economists it feeds into forecasts of future growth. Equity managers, by contrast, are more interested in how these trends affect specific businesses and portfolios than in the precise path of every near-term data point.

What the survey adds is a clearer sense of how that happens in practice. It suggests that the role of macro in an investment process depends heavily on the manager’s opportunity set, how their investment process is structured, and their investment time horizon. Understanding how these patterns interact can improve the dialogue between equity managers - who must live with both short- and long-term equity market cycles - and investors, who are often exposed mainly to macro narratives such as growth, inflation policy direction.

Overall, the survey points to macro living quietly within most bottom-up processes: informing and guiding, without overpowering or dictating final investment decisions.

From macro noise to context

In conversation, most managers speak easily about inflation risks, central bank reaction functions, consumer health, fiscal credibility or global liquidity. This does not automatically make them all top-down equity managers. In fact, when asked to describe their processes, a clear majority (51 of the 61 managers surveyed) are ‘labelled” as primarily bottom-up investors. At face value, that description is fair. However, what stood out in many of the survey responses was that ‘bottom-up’ often signalled that the manager does not necessarily start with a house macro view to generate ideas, and sees limited value in trying to forecast every economic data print.

To make that more concrete, it helps to go back to basics. Equity is ultimately a claim on a stream of future cash flows. Those cash flows are typically earned in an economy shaped by growth, policy, prices, wages, credit and politics.

These examples make the point that aggregate macro trends like financial conditions and growth prospects, shape the operating environment in which bottom-up managers build portfolios. In our findings, the real story is not whether macro matters but how it filters into the micro and how deliberately each manager builds that filtering into their investment process. We explore this in more detail in the survey results that follow.

What we asked the managers

To move beyond labels, the survey was designed around managers’ behaviour on macro rather than their opinions about it. Managers were asked to describe their investment approach and style, to indicate which macro variables they follow and which sources of macro insight they rely on. We also asked them to comment on how they separate macro insight from noise and how often they see macro developments linking to sector or share outcomes.

Responses from the managers were treated as qualitative insights rather than a formal statistical sample. We used them as windows into practice, forming the basis for our analysis of where macro enters the process, how explicitly it is used, and the language managers use when they explain the balance between macro and micro.

From this analysis, two dimensions stood out:

From this we derived four broad archetypes. They are not neat boxes but rather, a useful way of understanding how macro shows up within portfolios.

Four archetypes of macro use

Macro-light At one end of the spectrum, you find macro-light stock pickers. These managers track few, if any, explicit macro indicators. Several selected ‘none’ when asked which macro data they follow, and their written comments focused squarely on company fundamentals — business economics, capital allocation, management quality and valuation discipline. When prompted on macro, typical answers were that ‘they do not forecast macro and regard most macro commentary as noise.” This group is dominated by global quality or quality-growth investors running longhorizon portfolios. Their central belief is that durable franchises and reinvestment at high rates of return will wash out most of the volatility introduced by inflation cycles, rate moves or political news flow. For them, macro matters at extremes, such as when it threatens balance sheets, demand or the viability of a business model. For the rest of the time, it sits at the edge of the process as a background check rather than a regular input into idea generation or portfolio decisions.

Cycle awareness A second group, which we refer to as cycle-aware stock pickers, show relatively low formality but much higher integration of macro into their micro analysis. These managers may not maintain dashboards or explicit macro-overlays, but have a clear mental map of where the cycle sits and its implications for their equity ideas. In their language, for example, banks are sensitive to the rate cycle, retailers respond to employment and consumer confidence; and resource companies live and die by China and the commodity cycle. For some of these managers, macro influences which sectors move up the research agenda or how quickly they are willing to underwrite recovery in cyclicals, how cautious they are in allocating capital near the top of a capital-expenditure or commodity cycle. Importantly, these managers tend to discuss macro, drawing on their experience rather than using formal tools.

Macro-framed Macro-framed equity managers invest bottom-up but surround their research process with macro-aware guardrails. They tend to draw on multiple sources including sell-side economists, in-house macro commentary, policy releases and market indicators; and some refer to structured scenario work. The examples they provide emphasise risk framing more than idea generation. Here, macro shapes ranges and constraints. It can inform maximum sector weights, suggest when to tighten exposure to interest-sensitive areas, help define downside scenarios for highly leveraged or cyclical stocks; or alter hurdle rates under different inflation or rate paths.

Macro-structured Finally, there are macro-structured managers. These managers use explicit macro frameworks that influence their sector tilts, position sizes and, in some cases, valuation ranges. They refer to dashboards, scorecards and scenario models, and they describe specific actions under different macro conditions. For example, reducing cyclical exposure once certain leading indicators breach thresholds, or adjusting growth expectations when policy direction, currency regimes or real rates move in a meaningful way. Macro-framed managers use macro inputs to mainly build the fence around a fundamentally driven portfolio and steer how that portfolio is positioned through the cycle.

The four archetypes form a continuum rather than four rigid boxes - from macrolight stock pickers, through cycle-aware and macro-framed managers, to macrostructured integrators. None of these approaches is ‘right’ or ‘wrong’; each reflects a different mix of opportunity set, investment horizon and process discipline.

Conclusion - it is a continuum, not a contest

The survey reinforced a simple point - macro and micro analysis are not competing philosophies, but different vantage points on the same reality. Most equity managers remain fundamentally bottom-up in how they build conviction, spending most of their time on company research. Yet macro context is intertwined through that work more often than many labels suggest.

All four models are important and as a DFM we assess how managers with different approaches can be combined into a diversified portfolio, understanding the limits and benefits of macro data. Our key insight for investors is that ‘not forecasting macro’ does not mean ignoring it. In most of the investment processes that we examine, fundamentals drive conviction and macro defines the context in which those fundamentals evolve. Macro is in the micro, not as a replacement for stocklevel judgement, but as a constant companion to it. A way of keeping one eye on the weather while you navigate the terrain.