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Komfie Manalo, Opalesque Asia:

Hedge fund returns were mixed in the week covering 23 to 30 May, reflecting the heterogeneous impact from the market upturn. The Lyxor Hedge Fund Index was down -0.2% during the period (+0.6% YTD), Lyxor Asset Management reported.

Global macro underperformed, with significant dispersion in returns across managers. The fall in 10-year Bund yields was the main culprit, while the equity bucket (short U.S., long Europe) added to losses.

"Hedge fund performance has been disparate across strategies in May," Philippe Ferreira, senior strategist at Lyxor AM said. "Event driven funds extended their winning streak (+0.7%), fueled by merger arbitrage which tends to perform well when bond yields fall. In parallel, macro strategies underperformed (-1.3%), on the back of long positions on the USD and on hard commodities. The remaining hedge fund strategies (L/S equity, CTA, fixed income arbitrage) ended the month in the black, despite the poor showing of market neutral L/S equity funds (-1.3%)."

On the flip side, Lyxor AM said that CTAs outperformed last week, as they benefitted from long equity positions and cut EUR and GBP shorts vs. USD. Short energy positions also paid off. Finally, variable and long biased funds outperformed within L/S equity.

Ferreira added that in terms of positioning dynamics, it is striking to note the extent to which CTAs and global macro now differ with regards to ......................

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