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Alternative Market Briefing

Hedge funds report contrasting performances in April on Euro gains, French elections

Monday, May 15, 2017

Komfie Manalo, Opalesque Asia:

The French election, the appreciation of the Euro against the U.S. dollar, the slowdown in U.S. economic growth and Frexit fears all contributed to the contrasting performance of hedge funds in April across all strategies, Lyxor Asset Management said in its monthly briefing.

Lyxor AM senior cross asset strategist Philippe Ferreira said that the victory of Emmanuel Macron over Marine Le Pen was a relief for European risk assets in both equities and high yield credit. The victory also resulted for Frexit fears to recede.

"Ferreira said, "These market conditions led to contrasting performances across hedge fund strategies. The Lyxor Hedge Fund index was slightly down in April (-0.2%), as a result of negative returns experienced by global macro and CTA strategies. Both strategies were hampered by short positions on European currencies vs. USD. In parallel, momentum strategies were penalized by the announcement of general elections in the UK, which caused trend reversals across UK assets."

On a positive note, event driven, fixed income arbitrage and L/S equity indices were all positive in April, he added. In particular, the Lyxor Event Driven index outperformed, up 2% in April and 4.2% year to date (as of early May). Overall, higher positions on cyclical sectors such as financials and materials were rewarding.

Within event driven, Ferreira noted that merger arbitrage funds took the l......................

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