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Komfie Manalo, Opalesque Asia:

The rally in global markets fuelled the most hedge fund directional strategies, with special situations and L/S equity long bias managers leading the pack, Lyxor Asset Management said in its latest Alternative Investment Industry Barometer. The Lyxor Hedge Fund Index was up 0.8% in July, with seven out of 10 Lyxor indices ending the month in the black.

Philippe Ferreira, senior cross-asset strategist at Lyxor AM, commented, "The post-Brexit market rally in July fuelled directional hedge fund strategies such as L/S equity and event-driven. Yet, the near term outlook remains challenging as economic activity is weak and traditional asset classes are richly valued. Hence, we maintain a preference for hedge fund strategies with a relative value bias."

The report said that in July, market concerns over the strength of the U.S. economy and the Brexit impact eased, leading to a sharp rebound in risk assets. The U.S. earnings season also proved better than feared. Risk assets rallied in all geographies, with substantial gains in global equity markets. Credit spreads tightened significantly on both sides of the Atlantic, in the high yield segment in particular.

The end of July experienced a sharp trend reversal; the Fed and BoJ meetings were market game changers. The U.S. dollar significantly depreciated amidst the Fed’s status quo and mixed U.S. economic data (weaker Q2 GDP than expected) whi......................

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