- Advertisement -
- Advertisement -

Hedge Funds Resilient As Geopolitical Risk Intensifies

Report: Systematic Strategies

- Advertisement -

Stockholm (HedgeNordic) – Hedge funds are proving resilient in the face of an explosion of geopolitical risk, Lyxor writes in its latest weekly brief. With an increasingly speculative and uncertain first round of the French presidential election, the U.S. strike on Syria and tensions on the Korean peninsula, hedge funds strategies have for the most part remained positive, CTAs being the exception with slowed equity longs and energy shorts.

Lyxor’s own funds did not noticeably change positions, with CTAs remaining long equities, Macro funds keeping limited and relative exposures, and L/S Equity U.S. funds remaining more exposed than European ones, the latter adding safeguards.

“We are comfortable with our positioning,” wrote Jean-Baptiste Berthon, Senior Strategist and Cross Asset Researcher with Lyxor Asset Management. “We see lesser prospects for macro players until some uncertainties are lifted this summer. We see greater micro opportunities for L/S Equity and Special Situation funds, supported by a recovery in earnings (in for another test as the season starts) and intensifying corporate activity.”

The first round of the French election, set for April 23, remains impossible to predict, having become a four-way race with each candidate polling in the 18-23% range. Worries are intensifying that the late surge by the communist candidate Jean-Luc Melenchon could result in a two-way race between him and the Front National’s Marine Le Pen in the second round, which would considerably improve Le Pen’s chances of winning the presidency. Ms Le Pen has campaigned on an anti-immigration platform and has promised to hold a referendum on withdrawing France from the European Union.

On the Korean peninsula, threats by the DPRK to conduct its sixth nuclear test alongside a failed missile launch last weekend in response to U.S. president Donald Trump’s aggressive posture and an enhanced U.S. presence along Korean shores have put China under additional pressure to resolve the issue, upsetting China’s traditional status quo on the issue.

In the U.S. itself, failed initiatives in Trump’s political program have led investors to seriously question the degree of reflation that might be delivered, cooling some of the initial enthusiasm for his presidency.

In response to these uncertainties, the French OAT spread reverted to January highs, the implied Kospi volatility rose 5 points, safe havens outperformed cyclical assets and U.S. treasury yields receded alongside other reflation trades.

 Picture: (c) Ollyy—shutterstock.com

 

 

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

HedgeNordic Editorial Team
HedgeNordic Editorial Team
This article was written, or published, by the HedgeNordic editorial team.

Latest Articles

Indecap-PriorNilsson Deal Gets Regulatory Nod

Stockholm (HedgeNordic) – The Swedish Financial Supervisory Authority, Finansinspektionen, has granted approval for Indecap’s acquisition of fund boutique PriorNilsson Fonder. This strategic collaboration will...

Tidan Rides High on Normalized Market Conditions

Stockholm (HedgeNordic) – Tidan Fund, a hedge fund focused on capturing capital structure opportunities, is approaching its third anniversary this October with strong momentum....

Month in Review – August 2024

Stockholm (HedgeNordic) – Nordic hedge funds delivered solid performance during the roller-coaster month of August, with fixed-income-focused hedge funds leading the charge. The Nordic...

Danske Bank’s Multi-Asset Hedge Funds Gain Momentum

Stockholm (HedgeNordic) – In August 2022, Danske Bank Asset Management launched a hedge fund designed to capture ‘true’ alternative risk premia as compensation for...

Inspired by AP7, Carnegie Launches Leveraged Global Equity Fund

Stockholm (HedgeNordic) – As Carnegie Credit Edge comes to a close, Emil Nordström, who managed the fund’s derivatives strategy, is now steering a new...

Mandatum’s CTA Defies Trend in Tough August for Trend-Followers

Stockholm (HedgeNordic) – Trend-following managers had a tough time navigating markets in August, as evidenced by the 4.5 percent decline in the SG Trend...

Allocator Interviews

In-Depth: Commodities

Voices

Request for Proposal

- Advertisement -