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Global macro exposure to European equities hits five-year high

Global macro exposure to European equities hits five-year high


The Lyxor Hedge Fund Index was up 0.5 per cent in March, fuelled by fixed income strategies.

In Q1, meanwhile, event-driven managed to outperform, up 2.1 per cent, according to the latest Lyxor Hedge Fund Brief.
 
Improving returns for alternative strategies and rising concerns over the valuation of US equities led to strong inflows into alternative UCITS. In Q1, the asset class saw double-digit billion euro inflows in Europe, mainly benefitting multi-strategy, fixed income arbitrage and market neutral L/S strategies.
 
Lyxor writes: “In terms of positioning, it is interesting to note that global macro managers have significantly increased their exposure to European equities. It now stands at a five year high in a context of solid economic data and attractive valuation compared to the US. In parallel, CTAs cut positions on energy and agricultural commodities, reflecting strong crude stock building in the US.
 
“Going forward, we believe that event-driven remains a highly attractive strategy. Exposures are balanced between cyclical and defensive sectors; CEO confidence is at a decade high which is likely to translate into stronger corporate activity. Fiscal reform should be supportive for sectors such as telecommunications or consumer staples that rank high in event-driven portfolios. Finally, the newly appointed chairman of the Federal Communications Commission, Ajit Pai, has called for a light-touch, free market approach to regulation. This is likely to make the environment for event-driven managers more predictable and less sensitive to deal breaks.”

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