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Comment: Equity hedged and event driven managers winners in September and likely for 2013

Thursday, October 03, 2013
Opalesque Industry Update - Many equity-hedged and event-driven hedge funds have continued to hold and increase positions during September, and were rewarded as several equity events occurred and markets moved higher. Anthony Lawler, portfolio manager at GAM, comments that he expects to see the trend of equity-hedge and event-driven funds out-performing other hedge fund strategies to continue through the end of the year.

“Equity-hedged and event driven managers remain tactically bullish and fully invested, indeed with some increases in net and gross exposure after the Fed’s ‘no taper’ surprise. In September a number of public companies widely owned by event managers announced deals, asset dispositions, divestitures, and other accretive transformations which were well received by the market. Share buybacks also continue to be a positive catalyst for equity prices. This surge in corporate activity is helpful and expected to continue if the Fed remains accommodative and Washington agrees a new budget and raises the debt ceiling."

Lawler points out however that the Fed's ‘no-taper’ surprise in September 2013 did not help all managers: “The consensus long US dollar position and shorts in emerging markets hurt global macro managers when the “no taper” announcement surprised markets, weakening the dollar and re-invigorating emerging market bonds and currencies. Now those long US dollar and short emerging markets positions have been somewhat reduced while the Japan reflation theme remains in place through mainly long Nikkei and short Japanese yen holdings," Lawler said.

More broadly, hedge fund performance for September was positive as measured by the HFRX Global Hedge Fund index which was up 1.0 %. At the strategy level equity-related strategies fared best with event driven up 2.1% and equity hedge up 1.4%, while macro/CTA and relative value were down -0.3% and up 0.4% respectively, according to HFRX strategy index performance data.

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