Sun, Oct 23, 2016
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Lyxor research finds hedge funds are well positioned for year-end 2013

Monday, October 21, 2013
Opalesque Industry Update - Global growth should remain firm driven by economic strength in developed markets and the backdrop is supportive for higher equity prices. The US economic recovery remains on track despite a drag from reduced government spending and uncertainty about budget resolution. Economic trends in Europe and Japan are also positive and should benefit corporate earnings. The major central banks are erring on the dovish side, flooding markets with liquidity while equity risk premiums remain attractive.

In this context, we prefer directional equity strategies that benefit from both alpha and beta. Our favorite Hedge Fund strategies to express the pro risk theme are Long/Short Equity. Special Situation funds have also shown an ability to monetize actions such as activism, recapitalization, spinoffs and mergers.

The normalization process continues with healthy stock dispersion and relatively benign volatility. This translates into a large opportunity set for L/S Equity hedge funds to express bottom-up ideas. Talented stock pickers can benefit from both alpha returns from stock selection and beta from rising equity prices.

Global Macro funds should navigate well in an environment where major adjustments are taking place and we upgrade the strategy. The last decade’s massive capital flows into emerging markets may start to reverse as funding costs edge higher, revealing a growing differentiation across assets and regions. Central banks of vulnerable countries could need to raise policy rates to prevent capital outflows and curb inflation, putting further pressure on their domestic demand. Macro funds can express emerging market views in foreign exchange, fixed income and equities. In addition, in the developed world, the eventual normalization of monetary policy away from extraordinary measures plays into the hands of Global Macro funds.

We downgrade the L/S credit strategy to a relative underweight because of limited opportunities in the space and to emphasize our preference for other strategies. We are also cautious on fixed income arbitragers and other strategies which are vulnerable to higher interest rates in the medium term.

Lastly, we maintain our slight overweight stance on long-term CTAs despite disappointing returns in 2013. Performance drivers, such as trend and persistence, could improve once policy risks fade away, allowing the strategy to catch up.

“All in all, we believe Hedge Funds are well positioned to capture further upside for the remainder of 2013” says Jeanne Asseraf-Bitton, Head of Global Cross Asset Research.

Lyxor AM, Cross Asset Research: Keep Favoring Equity, Fourth Quarter 2013,

Recent related coverage:
08.10.2013 Lyxor hedge fund index up 1.13% in September, +3.17% year to date


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. M&A - U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga, Hedge fund Parvus shows hand, toppling William Hill merger deal[more]

    U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga From The fierce battle to buy Britain's biggest private equity group has come to an unexpected conclusion, with the original bidder walking away with the prize. SVG Capital has agreed

  2. Marc Lasry: Energy is still a phenomenal opportunity[more]

    From Distressed debt specialist Marc Lasry said energy debt is still a "phenomenal opportunity" because investors can get "massively overpaid" for the risk they take on. There are "huge opportunities" in the energy sector especially in restructurings, the Avenue Capital Group CEO said Tues

  3. Opalesque Exclusive: Ex-SAC manager re-emerges with market neutral hedge fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A manager re-emerged from the SAC battleground last year to launch his own hedge fund under the umbrella of New York-based investment firm Endicott Group.

  4. North America - Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation, Billionaire hedge fund titans Dinan, Lasry on election, markets and best investment ideas[more]

    Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation From Kyle Bass, founder of Hayman Capital Management, on Wednesday warned that the U.S. is headed toward so-called stagflation. Stagflation is typically described as persistently high inflation and hi

  5. Macro hedge funds up 3.3% in one week on Fed and Brexit pays off[more]

    Komfie Manalo, Opalesque Asia: Hedge funds were boosted by the strong performance of global macro funds, with the Lyxor Global Macro Index gaining 3.3% as of the week ending Oct. 11 (-1.7% YTD), Lyxor Asset Management reported. Their short on the p