Digital Assets Report

Newsletter

Like this article?

Sign up to our free newsletter

Hedge funds impacted on their US credit exposure, says Lyxor

Related Topics

Hedge fund strategies were hurt last week by their long exposures on US risk assets, especially credit positions, according to Lyxor Asset Management.

High yield has been negatively impacted by the deterioration in risk sentiment and by oil prices, in part related to the weighting of energy debt in the U.S. market. While they proved to be resilient since the start of the year, L/S Credit and CB Arbitrage funds were hurt by the widening in spreads. Event-driven funds were also hurt on their long credit exposure, with distressed funds underperforming the space. Greece had a very limited impact, as managers have low exposures on Greek positions – both on bonds and equities.

Last week was also characterized by the continued weakening in emerging market assets, which are still impacted by global growth concerns and by energy prices for oil producers. Global macro and L/S Equity managers have a rather constructive view about the prospects of emerging markets in 2015, after a lacklustre year for equities (- 3.72% for MSCI EM, +3.67% for MSCI World year-to-date). While a risk for the EM space is higher interest rates in the US, valuations of equities, fixed income and currencies look cheap for most countries. According to hedge fund managers, differences in fundamentals and monetary policies will be an important driver for returns in 2015, and they tend to express their views with relative value trades rather than pure directional plays on EM .

Like this article? Sign up to our free newsletter

Most Popular

Further Reading

Featured