Beverly Chandler, Opalesque London: FRM, Man Group’s $16 billion fund of hedge funds and managed accounts business has published its February 'Early View’ looking back at the markets and industry for last month and forwards towards possible sources of performance return over coming months.
Key highlights include:
FRM writes that looking ahead, further political manoeuvrings in Italy and German elections in the second half of this year may add to further market uncertainty. "One positive for equity markets going forward is the level of cash held on corporate balance sheets and in private equity fund......................
Market trends from January extended into early February as investor confidence increased, risk assets rose and government bonds sold-off. There was, however, a sharp reversal mid-month driven by uncertainty around the Italian elections and growing concerns surrounding the US sequester deadline.
- During the risk-off move in February, inter-stock dispersion remained high, supporting the view that stock behaviour is becoming increasingly driven by company-specific risk.
- We have not seen sufficient evidence to support the claim of a "Great Rotation" from bonds into equities as, for the most part, equities have been bought using cash. It remains unlikely that large outflows from government bond funds will take place until there is some persistent improvement in global growth.
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