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Beverly Chandler, Opalesque London: A research flash report from Lyxor Cross Asset Research Study for the fourth quarter of 2012, entitled 'Central Banks Buy More Time’ finds that hedge fund managers will benefit from stock selection.

The firm writes: "We believe the ECB’s "whatever it takes" promise substantially reduced tail risks. Risk premiums that have remained abnormally high since the outset of the financial crisis, should diminish over time." However, the firm warns that the road to normalization will probably be long and bumpy. "While policy uncertainties persist in the Eurozone, they are mounting in the U.S. which is facing the so-called "fiscal cliff". But the aggressive monetary policies across the world mean that the trough in the economic cycle could occur earlier than we previously had in mind".

Strategically, Lyxor continues to favor U.S. assets but have tactically raised their stance on the more volatile Eurozone equities to the same slight overweight stance. "Fundamentally, austerity continues to take its toll on European growth, thus compromising fiscal targets. Within Emerging markets, we believe EM equities should soon benefit from additional policy support and later from improved economic momentum" the firm writes.

For Lyxor, the most striking feature of financial markets since the crisis is probably investors’ inordinate antipathy towards equity. "Current equity risk premiums are far above......................

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