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Komfie Manalo, Opalesque Asia:

Hedge funds slightly weakened last week and started May in negative territory due to the retreat in risk assets. The Lyxor Hedge Fund Index ended down 0.4% (-3.2% YTD).

CTAs contributed the most last week, with long exposures to fixed income and their short positions on energy paying off.

Macro managers underperformed in the week ending May 03 (-1.9%), dragged down by FX and equity clusters. In particular, the BoJ disappointment inflicted heavy losses. Fixed income strategy delivered negative returns (-0.4%) as the rally in European financials lost some momentum and as spreads widened.

Jean-Baptiste Berthon, senior strategist at LyxorAM commented, "Hedge funds’ returns weakened in sympathy with last week's retreat in risky assets. Losses were mild in general, with few notable underperformers. By contrast, CTAs outperformed, recouping their earlier losses as yields and oil weakened. Funds keeping a low beta also performed well, the neutral and variable equity funds especially."

He added that sentiment deteriorated last week. A number of mixed economic releases failed to demonstrate any pick up in fundamentals. Macro data remained consistent with a sluggish global growth environment neither gaining nor losing momentum. ......................

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