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Laxman Pai, Opalesque Asia: In the hedge fund space, the market recovery has brought a respite for high beta strategies which struggled during the selloff, said Lyxor in its Weekly Brief. This is particularly the case for Special Situations and L/S Equity strategies.
According to Lyxor's Cross Asset Research team, equity markets seem to have reached a floor after the recent selloff but the recovery has been uneven. U.S. and EM equities were up 6% since the trough on October 29th while EMU (European Economic and Monetary Union) equities lagged significantly. In the U.S., the market rebound has been led by value and quality stocks while low beta stocks gave back gains.
Concurrently, commodity prices remained under pressure. The sharp fall in benchmark indices was essentially led by energy prices in a context where U.S. crude oil production and stocks rose markedly.
Sentiment remains nonetheless fragile. High frequency indicators report a deceleration in economic activity in the largest economies (except Japan). Meanwhile, monetary normalization is unlikely to be reverted in the short term and political risks stay elevated.
A wave of investigations into the U.S. President's businesses, 2016 campaign and current administration looms as soon as newly elected House Democrats take over in January.
CTAs lag a fragile market recovery
On the contrary, CTAs continued to face difficulties during the first week of November on the back of long pos...................... To view our full article Click here
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