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Benedicte Gravrand, Opalesque Geneva: Equity markets rallied in November while bond yields continued to fall as market volatility generally subsided. The US dollar continues to be strong. Metals prices are falling. And the high global liquidity might remain as such for a while.
According to two fund of hedge funds houses, this backdrop benefited quantitative and global-macro but not discretionary strategies. All hedge fund managers should watch out for the impact of lower oil prices, however, even if they expect the markets to remain strong into the New Year.
Lack of alpha generation by discretionary managers
According to the latest "Early View" report from FRM, Man Group’s $16.7 billion fund of hedge funds and managed accounts business, the oil story might be a warning to investors.
However, "the precipitous, and accelerating, decline in the price of oil over the last two months has postponed the danger of inflation for the foreseeable future," FRM notes. And there are risks of deflation.
In FRM’s view, the investment environment will remain the same.
"What concerns us more is the lack of alpha generation by discretionary managers over the past few months," FRM’s report says. "Quantitative strategies by contrast have performed much better. Equity managers have struggled recently despite the market extending to new heights. Al this year, we have observed that equity manager...................... To view our full article Click here
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