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Political uncertainty has had limited impact on hedge funds, says Lyxor

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Contagion from recent political upheaval, including former FBI director Mark Comey’s leaked memo and continued concerns over alleged ties between the Trump campaign and Russia, has been reasonable, according to Lyxor.

It comes amid persisting signs of decent global growth and contained anxieties about China.
In its latest weekly brief, the firm writes: “The Lyxor Hedge Fund index was up +0.4 per cent as of Tuesday. Macro funds outperformed on their long European equities and long energy. Special situations continued to make steady progress. L/S equity fund returns were mixed, reflecting heterogeneous impact from the sudden market rotation.
“The volatility in US bonds and dollar could rise ahead of the June Fed meeting and the start of the US budget negotiations. CTAs’ and macro’s long bonds and long USD exposure vs DM crosses are vulnerable to speculative political developments. We reiterate our preference for micro over macro approaches. We note that the ending earning season and the sudden sector rotations might result in more challenging conditions for market neutral funds.”

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