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Komfie Manalo, Opalesque Asia:

It was a negative week for hedge funds as at end October 3, concluding a tough quarter for alternative strategies, according to data compiled by Lyxor Asset Management’s Weekly Brief. The performance drivers of Q3 were once again running at full tilt last week: Choppy equity markets, credit spreads widening, and a strong U.S. dollar among weaker commodity prices.

Philippe Ferreira, Lyxor AM’s head of research, managed account platform, said that underperforming strategies in the last quarter were found on the relative value and event-driven side. After a strong start this year, convertible arbitrage and long/short credit fund have suffered from the outflows witnessed on the credit space, whilst event-driven funds reported some losses on broken deals during the summer months. Credit has not been in a good spot lately, and the impact can be felt on funds focusing on bottom-up opportunities.

He noted, "On the positive side, we have seen a pick-up in performance on systematic strategies: CTAs and long/short market neutral are now the best performing strategies on a YTD basis, thanks to a strong third quarter. Interestingly, most recently trends have been very profound on FX and commodity markets, whilst in the last few years equities have proven to generate most of the gains. This shows that selecting the right hedge fund strategy, adapted to a given market environment, is key to generating ......................

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