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Hedge funds gain in February fuelled by CTAs and Event Driven

Industry Report

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Stockholm (HedgeNordic) – Hedge funds had a positive month in February. According to French asset manager Lyxor, the industry (as measured by the Lyxor Hedge Fund Index) gained 1 percent on the month with 8 out of 10 sub-indices showing positive contributions.

CTA strategies was the single strongest outperformer thanks to substantial long positions in equity markets. These positions were largely supported by a general upbeat sentiment on the back of Trump´s plans to unveil his “phenomenal” tax policy and comforted by positive economic and inflation prints across main regions.

“CTAs delivered upbeat returns lately, fuelled by the rally in equities and commodities. Yet, the strategy is increasingly vulnerable to trend reversals as stock prices are unlikely to continue to rise at the current pace in the near term. In parallel, Event-Driven strategies, which outperformed year to date, appear to have the potential to pursue their upward trend on the back of a strong pace of M&A activity and corporate restructuring in the U.S”, Philippe Ferreira, Senior-Cross Strategist at Lyxor Management writes in a note.

Event Driven strategies were also on the rise as M&A activity in the US remained robust. Overall, tax reform in the US should translate into higher corporate activity, a tailwind for the Event-Driven strategy, Lyxor writes.

Among strategies that underperformed during the month was fixed income as the Lyxor Fixed Income arbitrage index posted a loss of 1,3 percent.

So far in 2017, Special Situations is the strongest performing strategy, followed by Equity Long/Short (market neutral and variable bias) and CTAs, according to Lyxor´s hedge fund indices.

 

Picture: (c) TischenkoIrina – shutterstock

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Jonathan Furelid
Jonathan Furelid
Jonathan Furelid is editor and hedge fund analyst at HedgeNordic. Having a background allocating institutional portfolios of systematic strategies at CTA-specialist RPM Risk & Portfolio Management, Mr. Furelid’s focus areas include sytematic macro and CTAs. Jonathan can be reached at: jonathan@hedgenordic.com

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