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Hedge funds resilient amid political and geopolitical stress, says Lyxor

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Hedge funds proved resilient during last week, most strategies being positive despite political and geopolitical stress including tensions between the US and North Korea.

CTA funds were the downside exception, dragged by their long in equities and shorts in energy.
Merger funds, on the upside, were boosted by the end of the legal battle over the Abbott acquisition of Alere, and by the bidding war over the generic drugs producer Stada.
Funds at Lyxor did not meaningfully alter their positions this week. CTAs remain long equities, macro funds keep limited and relative exposures, L/S equity US funds are more exposed than their European peers, who added safeguards.
Lyxor’s Cross Asset Research team writes: “We are comfortable with our positioning. We see lesser prospect for macro players until some uncertainties lift by the summer. We see greater micro opportunities for L/S equity and special situation funds, supported by a recovery in earning (in for another test as the season starts) and intensifying corporate activity.”

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