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Alternative Market Briefing

Event-driven hedge funds underperform but prospects are improving

Tuesday, August 04, 2015

Komfie Manalo, Opalesque Asia:

Event driven managers underperformed, both in the past two weeks (-0.9% as of end July 21) and (-0.6% as of end July 28), partly as a result of exposures to commodity-related sectorss, said Lyxor Asset Management. However, positive developments in healthcare, a sector in which the strategy retains sizeable exposures, are supportive. Overall, the Lyxor Hedge Fund Index was down last week (-0.8%) but remains in positive territory in July (0.7%).

Philippe Ferreira, senior cross asset strategist at Lyxor AM, said that heading into the summer break, companies have continued to report earnings above expectations, especially in Europe. In the U.S, healthcare and consumer goods & services companies posted solid earnings, beating expectations as well.

"Yet, risk assets were under pressure leading to negative returns for hedge funds last week. Such headwinds are likely to be short term and need to be replaced in the context of thinly traded markets amid somewhat disappointing earnings releases in the U.S.," Ferreira said.

Event driven, global macro and long/short equity strategies underperformed. They lost approximately 1% on the back of the negative returns of equity markets (S&P 500 -1.2%, Eurostoxx 50 -2.6% during the period under review).

CTAs outperformed, although they were also in negative territory last week (-0.2%). On a month-to-date basis they achieved super......................

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