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Hedge funds positive as markets rebound, says Lyxor

After a challenging beginning in August, on the back of higher risk aversion, markets started their rebound and progressively recouped their losses, according to Philippe Ferreira, head of research at Lyxor’s Managed Account Platform.

The easing of geopolitical tension in Iraq and Ukraine has fuelled renewed investor appetite for risk.
 
The amplitude of the rebound was, however, capped by a weaker global macro momentum: a flat and disappointing dynamic in EU, a probable peak in US and the fragilities of the Japan recovery, keeping risk assets under pressure.
 
In this context, hedge funds, which are overall still long risk, behaved as expected by recovering from the three previous difficult weeks. The Lyxor Hedge Funds Index is up 1.2 per cent this week, back to positive territory on a year to date basis.
 
At a strategy level, long term CTA is the best strategy this week, posting a performance of +3.0 per cent. It was a perfect week as gains came from all of their buckets: long equities, long rates, short energy and short EUR/USD.
 
Event driven funds also performed well with merger arbitrage index up 1.6 per cent and special situation index up 1.8 per cent this week. Despite the troubled past several weeks and the termination of several large deals, reinforced hedges limited part of the losses. Managers remain confident as many other deals are still on track. All in all in 2014 these are still among the best strategies. 


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