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Beverly Chandler, Opalesque London: Man’s fund of fund division FRM reports in its Early View for March that the hedge fund industry posted another positive month for March, with the HFRX Global Hedge Fund Industry finishing the month +0.72%, taking its Q1 performance to +3.13%. FRM writes: "Early data suggests that the performance was generated across a broad range of styles with most strategies ending the month in positive territory."

FRM believes that the core source of return for Equity Long/Short managers should be from sector or stock picking, rather than simply from market exposure. "We have commented recently that we believe a drop in inter-stock correlation has resulted in favourable conditions for these stock pickers. One of the concerns was that the end of the Q1 earnings season could once again result in Macroeconomic conditions (rather than fundamental stock-specific factors) driving the pricing process. The emergence of the Cypriot difficulties during March should have served to exacerbate these correlation concerns."

However, the firm finds that most analyses suggest that the end of earnings season has not resulted in any noticeable increase in the correlations. "Indeed, BoA/ML research has suggested that interstock correlations have fallen to a seven year low during March. However, we remain......................

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