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Matthias Knab, Opalesque for New Managers: Three strategy upgrades signal opportunity amid geopolitical volatility and late-cycle market dynamics

Man Group's latest quarterly hedge fund strategy outlook signals a broadly positive environment for alpha generation in 2026, despite markets choosing to ignore key geopolitical risks that the firm believes are creating significant opportunity for volatility-focused strategies.

The firm has upgraded three strategies to positive: Long-Biased Equity Long/Short, Market Neutral Equity Long/Short, and Merger Arbitrage, reflecting elevated dispersion, record M&A activity, and late-cycle dynamics that favor active managers.

According to Adam Singleton, CIO of External Alpha at Man Group, three key themes will drive markets this year: geopolitics, monetary policy (particularly the next Fed chair), and AI.

Geopolitics: The report notes that 2026 started with the US seizing Venezuelan President Maduro, highlighting an era where unilateral military strength outweighs treaties and international law. Man Group observes that markets have been "typically muted" in response to such developments, with the narrative being that deteriorating global security is "just too hard to price, so best to ignore it."

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