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Komfie Manalo, Opalesque Asia: Most hedge fund strategies outperformed in the last week of February as the Lyxor Hedge Fund Index was up +1% (+0.7% YTD), with event-driven posting the highest gains, Lyxor Asset Management said in its monthly report.
The report added that merger arbitrage funds benefitted from their top M&A positions. Long positions on the NXP vs. Qualcomm transaction and Sky contributed to the bulk of their returns. L/S Equity variable bias funds rode the wave of the market recovery. Emerging and Asian focused specialists outperformed their peers, in line with their underlying markets.
"The return of market volatility in February hurt equity markets significantly. For the first time in 15 months, the MSCI World ended the month in the red, down -3.5%, as EMU and Japanese markets underperformed," said Philippe Ferreira, Lyxor AM's senior strategist.
He said that CTAs thrived from the drop in European bond yields, rising energy prices and their long albeit reduced equity allocations.
The devil is in the details
However, Ferreira said that one area of concern is that fixed income did not provide protection. The Barclays Global Aggregate Bond Index was also down in February. Actually the equity market rout appears to have been caused by fears of inflationary pressures, pushing bond yields higher in anticipation of a tighter monetary stance in the U.S.
He went on to say, "The positive...................... To view our full article Click here
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