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Komfie Manalo, Opalesque Asia:

March has been a positive month for risk assets, claimed Lyxor Asset Management in its Weekly Brief. As soon as mid-February, the Fed started to prepare markets for a softer stance than expected by market participants. Mid-March at the FOMC meeting, it presented a downward revision of growth and inflation forecasts for 2016, consolidating the rally in both equities and bonds.

Hedge funds delivered positive returns in March, supported by the bullish market environment and the dovish stance of the Federal Reserve. Year-to-date, hedge funds remain nonetheless in negative territory, though they outperform risk assets on a risk adjusted basis. Fixed income has continued to perform lately but stretched valuations do not support aggressive positions on government bonds. In effect, 10-year bund yields are close to zero as of early April and 10-year Japanese government bond yields are negative.

Philippe Ferreira, director and senior cross-asset strategist at Lyxor AM said that in this environment, hedge fund strategies with higher directionality such as event-driven, L/S credit and L/S equity outperformed. In parallel, strategies that are more defensive such as CTAs and global macro underperformed. On a YTD basis however, CTAs continu......................

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