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Laxman Pai, Opalesque Asia: The active investment backdrop, and in particular for hedge funds, is steadily improving, said Lyxor in its weekly brief.
Soaring policy uncertainties and monetary liquidity flows in the first part of the year were challenging for fundamental investors picking assets with distorted valuations and speculative catalysts.
"With central banks likely to stand on hold, receding uncertainties and signs of a modest inflection, we expect more economic discrimination and a greater focus on micro-trends, as well as on finding affordable value assets," said Lyxor.
Liquidity for longer, value at an affordable price and economic dispersion were Lyxor's driving hedge fund themes.
"Accordingly, we overweight Special Situations, very value-oriented styles, with an extra tilt towards smaller caps. We continue to favor L/S Credit strategies, likely to further benefit from global liquidity, with rising dispersion as credit metrics start to deteriorate," it said.
"We would also overweight EMfocused Macro strategies to benefit from rising economic and market dispersion and from a variety of distinct themes. We still favor Merger Arbitrage strategies which provide uncorrelated carry," it added.
"In contrast, we would downgrade L/S Equity neutral strategies, vulnerable to further swings in momentum and market sentiment. Moreover, their overall bias is less appealing in our base case scenario," Lyxor noted.
Balance in Macro and CTAs strate...................... To view our full article Click here
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