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Benedicte Gravrand, Opalesque Geneva: The Lyxor Event Driven Broad index is up 5.7% YTD even though its August performance was in negative territory (-1%) for the first time since October 2016.
In a weekly brief titled "Event-driven takes a summer break," Lyxor Asset Management's Cross Asset Research team says, "The summer air pocket was mainly due to the negative returns delivered by special situations funds (-1.8% in August, +5.9% YTD) which suffered losses on consumer holdings. Health care stocks such as NuVasive and Zimmer Biomet detracted from performance earlier in the month; while more recently Sotheby's and Nestle dragged down the returns of special situations funds. Meanwhile, merger arbitrage funds stayed afloat (+0.1% in August, +5.5% YTD) despite the widening of deal spreads over the course of August. The NXP Semiconductors vs. Qualcomm planned merger continued to be an important driver of performance of merger funds last month, while Time Warner vs. AT&T was a detractor."
Lyxor will maintain an overweight stance on event driven strategies, in the belief that the summer break is meant to be short lived.
"On the one hand, we still expect that the U.S. administration will be able to move forward with fiscal reform in the coming months," the report says. "If confirmed, this is likely to foster corporate activity and provide opportunities for special situations funds. Meanwhile, with de...................... To view our full article Click here
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