Sat, Mar 28, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Lyxor Hedge Fund Index up 0.08% in April, 3.2% year to date

Wednesday, May 08, 2013
Opalesque Industry Update - The Lyxor Hedge Fund Index was up +0.8% in April, bringing year-to-date performance to +3.2%. 12 Lyxor Strategy Indices out of 14 ended the month in positive territory, led by the Lyxor L/S Equity Market Neutral Index (+3.9%), the Lyxor CTA Long Term Index (+3.0%) and the Lyxor Merger Arbitrage Index (+1.5%).

Risk assets mostly rallied in April after a modest sell off in the beginning of the month and most hedge fund strategies generated positive returns for the month. Economic data continues to paint a picture of a mixed recovery with disappointing data in Asia and Europe and shallow growth in the U.S. Equity markets corrected about 5 to 10% in mid April due to disappointing macro news but data in the second half of the month rebounded slightly.

From a bottom up perspective, the Q1 earnings season in the U.S. also firmed slightly from a weak start. Companies on average beat EPS estimates by 6% whereas the pace was closer to 3% at the start of the earnings season. Central banks also reminded investors that accommodative policies can be further eased if data remains weak. Risk assets rallied after the Federal Reserve noted it may expand QE if the data warrants it. The ECB was also more dovish than investors expected.

Strategy-wise, L/S equity funds generated positive returns in April and generally benefitted from the rally. Variable and long bias strategies were up 0.4% and 0.6% respectively benefitting from net long exposure to the market. L/S Equity Neutral strategies were up 3.9% and showed the best performance in April. Correlation among stocks remains low at about 30% and continues to provide a fertile environment for stock picking on both the long and short side. Additionally, earnings season is providing company specific catalysts for additional dispersion.

Event driven strategies performed well with Merger Arbitrage strategies up 1.5% in April, Distressed up 0.8% and Special Situations up 0.1%. Merger Arbitrage was helped by the general risk on environment where deal spreads mostly tightened. The pace of new deal announcements is disappointing given the level of cash on company balance sheets. Companies are generally focusing on returning money to shareholders via buybacks and dividends instead of making big acquisitions.

Credit funds generated strong performance with L/S Credit Arbitrage up 1.3% and Convertible Bonds up 0.8% as well. The compression of spreads and lower bond yields continued in April which helped the strategies. New bond supply is outpacing last year’s level as companies take advantage of the low rate environment. This is highlighted by Apple’s record bond offering at the end of April which was in high demand despite the small premium over the risk free rate. Net fund flows remained positive, with loan funds continuing to see greater inflows than that of bond funds. In structured credit, new CLO issuance tumbled in April as new regulation was enacted that now requires banks to take a larger capital charge for such assets (legacy CLOs are not subject to the new guidelines).

Long term CTA strategies did well in April with the average fund up 3.0%. Long and medium term trends persisted in many markets as equity prices climbed while bond yields and commodity prices declined. Short-term CTA’s performance was weaker with the average fund down 0.9%. Short-term strategies were hurt by seesaw price swings in April caused by weaker than expected economic data.

“Market reaction remains liquidity driven and hedge fund exposures show that managers continue their constructive positioning” says Stefan Keller, Head of Managed Account Platform Research & External Relations at Lyxor AM.

Press release
Lyxor Flash - Alternative Investment Industry Barometer, April 2013

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. Other Voices: The role of diversification in CTA portfolios[more]

    2014 brought a resurgence of managed futures strategies, or CTAs, which performed very well as a whole, outperforming all other hedge fund strategies. However, a closer look reveals that there was a wide range of performance, or return dispersion, across managers. The bottom line? Not all CTAs

  4. Neuberger Berman unit buys 20% stake in activist hedge fund Jana Partners for $2bn[more]

    Komfie Manalo, Opalesque Asia: Neuberger Berman’s unit Dyal Capital Partners bought a 20% stake in activist hedge fund firm Jana Partners worth $2bn, WSJ.com reports. The deal comes as activi

  5. Hedge fund launches fall again, $1bn funds found to outperform even smaller hedge funds[more]

    Komfie Manalo, Opalesque Asia: The number of new hedge fund launches fell again in 2014, the third consecutive year of decline, while fund liquidations saw their first drop since 2010, according to the latest HFR Market Microstructure Industry Report released by industry data provider HFR. Acc

 

banner