Q4 was a challenging quarter, says UBP AIS CIO

Over the fourth quarter of 2021, DM equities, except for Japan, were broadly positive, ending the third year in a row with strong calendar year returns, according to the latest UBP Quarterly Strategic Review & Outlook by Kier Boley, CIO of UBP’s Alternative Investment Solutions.

Over the fourth quarter of 2021, DM equities, except for Japan, were broadly positive, ending the third year in a row with strong calendar year returns, according to the latest UBP Quarterly Strategic Review & Outlook by Kier Boley, CIO of UBP’s Alternative Investment Solutions.

Boley writes: “EM equities suffered, mainly dragged down by higher inflation and negative news on China. On the fixed income side, uncertainties about future growth led to a flattening of the US yield curve. The front end of the curve moved higher, while the back end remained flat.

“Q4 provide to be a challenging quarter in terms of performance with losses concentrated in November resulting in the main alternatives index posting a small gain of +0.6 per cent, as measured by the HFRI Fund Weighted Composite Index. At the strategy level Equity Long Short and Event Driven posted the highest relative returns supporting their already strong outperformance through 2021. For the year it was notable the wide divergence in performance as equity focused strategies outperformed Discretionary Macro by over 10 percentage points.

“The emergence of the Omicron variant in November initially led to a strong increase in equity volatility. However, markets were quick to recover as initial data indicated a lower risk of severe disease. On the fixed income side, uncertainties about future growth due to less accommodative central bank policy led to a flattening of the US yield curve. This led the front end of the curve higher, while the back end remained flat across a number of DM markets.”