Following a strong Q1, hedge funds have kept performing as we move to the next quarter. The Lyxor Hedge Fund Index is up 0.4% over the week with all but one strategy closing the week positive. A disappointing job report for the month of March in the US was the main event of a rather quiet start to April.
Head of Research – Managed Account Platform
Click here to download the full report
Following a strong Q1, hedge funds have kept performing as we move to the next quarter. The Lyxor Hedge Fund Index is up 0.4% over the week with all but one strategy closing the week positive. A disappointing job report for the month of March in the US was the main event of a rather quiet start to April.
This is leading to a reassessment of US monetary policy and driving risk assets and commodities higher. Markets have actually experienced significant moves in the commodity space. In particular oil prices rebounded sharply with the WTI up 13%. The drop of energy prices has been one of the major themes of recent months, and continues to impact the performance of Hedge Funds.
On the CTA side, the strategy was down 0.4% over the week. The sharp rebound of oil prices and the commodity complex as a whole detracted as managers have been increasing their short positions on the asset class since the start of the year. Long USD positions also contributed to losses as the greenback lost some ground last week, especially against EM currencies. Losses have been mitigated by gains on equity and fixed income positions, which are still benefiting from the dovish tone of global central banks.
The Lyxor Global Macro Index is up 0.7% over the week. Commodities globally added to the gains, long exposure to agriculturals and to the energy sectors proved particularly discriminating among macro managers as oil and grain prices soared. Fixed Income and Equity buckets also contributed positively to performance.
L/S Equity strategy has been positive for the start of April, posting a 0.6% return. Managers benefited from a global risk-on sentiment driving up equity markets across regions. Emerging managers and especially Asian ones outperformed. Chinese equity markets continued to rally, fuelled by a number of recently announced, accommodative policies.
Lastly, Event driven funds kicked off Q2 on a positive note (up 0.4%), with gains coming from various sectors. Royal Dutch Shell, with its takeover of BG Group for USD70bn, has opened the way for a round of consolidation in the energy sector, which is testimony of how falling energy prices have put pressure on the industry. While remaining cautious, increasing opportunities in this sector should help managers to generate performances.
Click here to download the full report
