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Komfie Manalo, Opalesque Asia:

Hedge funds ended the last two weeks of 2015 on a positive note with the Lyxor Hedge Fund Index up 0.4% as of Dec. 29 (+0.2% YTD), supported by event driven managers. Overall, they produced strong alpha relative to traditional assets until Q4. They lost about half of their advance during the rally, heavily dragged by the Special Situations’ underperformance.

In their 5th Jan. Weekly Briefing, Lyxor Asset Management said that fund managers benefitted from bottoming credit and oil prices.

Lyxor AM senior strategist Philippe Ferreira commented, "It paved the way for a small year-end equity rally, in low trading volumes and with scarce fundamental data. Event driven funds were up 1.1% in December (-3.3% YTD), alleviating the earlier losses. Year-to-date, special situations managers were the main performance detractors while merger arbitragers ended 2015 nearly flat. CTAs (-1.1% MTD, -2.6% YTD) had a volatile year. They accumulated strong returns over Q1, before slowly recovering from the bond-rout episode. On the positive side, L/S equity (0.7% MTD, 4.1% YTD) and global macro (0% MTD, 2.4% YTD) outperformed.

According to Ferreira, 2015 remained macro driven, dominated both by monetary policies and the shifts in deflation scares, themselves function of the stance regarding the Chinese transition and oil prices.

Lyxor AM cited four phases that paced markets and hedge funds trends last......................

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