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• Equity-focused strategies and CTA funds have benefited from the large impact of European and Japanese QEs, as well as the Fed’s patience. European L/S Equity funds, while cautious, managed to limit volatility and catch the rally. Systems, mainly trend-followers, are still gaining from the “central bank” play, and generating gains on long equity and bond positioning.

• Global macro funds were well positioned at the start of the year to gain from fundamental differences between economic zones, mainly thanks to their short Euro positioning and relative value trades on rates. On the negative side, long positions on EM and commodity markets experienced downside moves as the US dollar surged.

• Hedge funds gained from the first signs of Fed normalization and its consequences. Event-Driven gained on recovering valuation, significant corporate actions. The quarter was characterized by periods of higher volatility: This helped tactical managers and systems, mainly U.S. equity managers and short-term CTAs, to gain from short-lived opportunities.

As a consequence, hedge fund returns were generated with low volatility, thanks to different alpha drivers over the quarter. Heading into Q2, we are confident that hedge funds will benefit from a more fragmented environment, after highly macro-driven markets in Q1.

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