Opalesque Industry Update - Global financial markets posted mixed gains in December, recovering intra-month, mid-December declines to conclude strong performance for both 4Q and FY 2013 as the US Federal Reserve began the process to reducing quantitative easing measures. Global equity markets were mixed, with US & European gains partially offset by mixed performance in Asia and Emerging Markets. European equities also posted gains, led by Germany, Russia, the U.K., Sweden and the Netherlands, while Asian equities were mixed with gains in Japan, Taiwan and India offset by declines in China, Hong Kong and the Philippines. |
Equity gains were led by the US as the outlook for the US economic recovery continued to improve with large cap Industrials leading December performance; Semiconductors, Telecommunications and Energy sectors led performance in December. Despite the broad based gains, certain developed and emerging markets posted declines for the month, led by Turkey, Argentina, Italy & Brazil. Fixed income yields rose as the US Federal Reserve reduced monthly fixed income purchases, with the U.S. 10 Year bond yield closing the year above 3%, while the US curve flattened as yields rose more sharply in shorter dated issues.
European yields also generally rose led by increases in UK Gilts, German Bunds, France, Russia and the Netherlands, while high yield credit tightened into year end. The US dollar posted mixed performance, with gains against the Japanese Yen, Argentine Peso and Indonesian rupiah offset by declines against the British Pound, Euro and Swedish Krona. Energy commodities posted gains led by Crude Oil & Natural Gas, while Metals were mixed as Gold & Silver declined; agricultural commodities declines were led by Wheat & Sugar, while Cotton gained. UCITS compliant Hedge funds posted gains, with the HFRU Hedge Fund Composite Index gaining +0.22% for December.
The HFRU Equity Hedge Index posted a gain of +0.43% for December, with positive contributions from Global Technology, Financials, European and Diversified Emerging Markets equities, which were partially offset by exposure to Turkey, Brazil and China.
HFRU Event Driven Index posted a gain of +0.80% for December, with contributions from European Equity Special Situations, Capital Structure Arbitrage and Merger Arbitrage managers, which were only partially offset by Emerging Markets exposure.
HFRU Macro Index posted a gain of +0.11% for December, with contributions from Systematic CTA, Discretionary Commodity and Trading Oriented strategies, which were only partially offset by declines in Commodity Metals and discretionary Currency exposure.
HFRU Relative Value Arbitrage Index posted a decline of -0.13% for December, with gains in Fixed Income, Asset-Backed and Convertible strategies offset by declines in Volatility and Emerging Markets exposure.