{"id":29419,"date":"2013-07-09T00:08:30","date_gmt":"2013-07-08T22:08:30","guid":{"rendered":"http:\/\/beta.next-finance.net\/news\/hedge-funds-anchored-in-positive-territory-in-spite-of-equity-and-bond-sell-off-hits\/"},"modified":"2013-07-09T00:08:30","modified_gmt":"2013-07-08T22:08:30","slug":"hedge-funds-anchored-in-positive-territory-in-spite-of-equity-and-bond-sell-off-hits","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/news\/hedge-funds-anchored-in-positive-territory-in-spite-of-equity-and-bond-sell-off-hits\/","title":{"rendered":"Hedge funds anchored in positive territory in spite of equity and bond sell-off hits"},"content":{"rendered":"<p><strong>All Lyxor Indices ended the month of June in negative<br \/>\nterritory,<\/strong> worst index performers were the CTA Long Term<br \/>\n(?2.64%), the Lyxor Long\/Short Equity Market Neutral Index<br \/>\n(?2.45%) and the Long\/Short Equity Credit Arbitrage Index<br \/>\n(?2.40%).<\/p>\n<p><quote> The Lyxor Hedge Fund Index posted a negative<br \/>\nperformance at -1.63% in June but remains solidly anchored<br \/>\nin positive territory at the end of H1 2013 (+1.85% YTD).<\/quote><\/p>\n<p>>> <strong>Hedge Fund performance in June was hurt by de-risking<br \/>\nand a re-pricing of all assets due to higher bond yields.<\/strong> Most<br \/>\nasset classes declined in value and hedge funds were hurt<br \/>\nby a lack of safe haven and higher correlation among assets.<br \/>\nThe Lyxor Hedge Fund Index was down -1.6% in June.<\/p>\n<p>Importantly, the bulk of the bond yields re-pricing might be<br \/>\nfinished. Though higher yields over the next 12 months<br \/>\nremain a distinct probability, few market participants expect<br \/>\nbond yields to increase by the same sharp pace as in June.<br \/>\nIn addition, investing in emerging markets proved difficult in<br \/>\nJune as the entire asset class sold off on the back of the rate<br \/>\nfunding spike in China. This funding spike was temporary<br \/>\nand might recede as the authorities in China find a balance<br \/>\nbetween curtailing credit growth and keeping financial<br \/>\nmarkets functioning smoothly. According to managers on the<br \/>\nLyxor Managed Account Platform, the dislocation in asset<br \/>\nprices in June represents an attractive entry point for hedge<br \/>\nfunds to benefit from normalization going forward.<\/p>\n<p>>> <strong>Equity focused funds performed poorly as both cyclical<br \/>\nand defensive stocks were down in June.<\/strong> L\/S Equity Long<br \/>\nBias funds were down 1.7% in June, L\/S Neutral funds were<br \/>\ndown 2.5% and Variable bias funds were down 0.4%. Even<br \/>\nthough equity indices sold off, long bias funds increased their<br \/>\nnet exposure to 62% from 58% by adding on the long side to<br \/>\nhigh conviction ideas. Variable bias funds played it more<br \/>\ndefensively, and reduced their net exposure in June from<br \/>\n65% to 52%. The new net exposure of Variable bias funds is<br \/>\nabout in-line with the average of the prior year.<\/p>\n<p>>> <strong>Global Macro Funds also fared poorly in June, down<br \/>\n1.9%.<\/strong> Two major factors contributed to the negative<br \/>\nperformance. First, the change in tone by the Fed surprised<br \/>\nmany market participants and caused a massive coordinated selloff in fixed income markets globally. Fixed income sold off<br \/>\nin Europe even though the ECB didn\u2019t signal any policy<br \/>\nchange. The magnitude of the fixed income sell off in<br \/>\nemerging markets was even worse than the sell-off in<br \/>\ndeveloped economies. EM currencies also declined vs. the<br \/>\nUSD and this likely hurt the performance of macro funds.<br \/>\nThe second major factor was the continued pullback and<br \/>\nvolatility in Japanese equities and USD\/JPY. In terms of<br \/>\ngross exposure to asset classes, macro funds decreased<br \/>\nexposure to commodities and rates and increased exposure<br \/>\nto FX trades over the course of June.<\/p>\n<p>>> <strong>June proved to be a challenging month for CTA\u2019s as well.<br \/>\nShort-term CTA\u2019s were down 2.1% while long-term CTA\u2019s<br \/>\nwere down 2.6%.<\/strong> CTA\u2019s were hurt by the bond and equity<br \/>\nsell-off while the funds were positioned on the long side. In<br \/>\naddition, the USD weakness vs. other G7 countries in the 1st<br \/>\nhalf of June contributed to negative performance. The<br \/>\ncontinued decline of commodity prices was a positive<br \/>\ncontributor, although not enough to offset the losses in other<br \/>\nasset classes.<\/p>\n<p>>> <strong>Credit weakness pressured performance for funds<br \/>\nfocused on the space. L\/S Credit Arbitrage (-2.4%) and CB<br \/>\nArbitrage (-14%) were both hurt by a widening of spreads.<\/strong><br \/>\nCredit funds cut risk throughout the month with gross<br \/>\nexposure declining to 208% from 264% in May and net<br \/>\ndeclining to 40% from 58% in May.<\/p>\n<p>Relative Value and idiosyncratic strategies like Distressed and<br \/>\nMerger Arbitrage fared relatively better than other strategies<br \/>\nwith returns of -1.8% and -0.1% respectively. However,<br \/>\nSpecial Situation Strategies were down 2.3%.<\/p>\n<p><quote><em>\u201cThe final month of the quarter has seen all strategies<br \/>\ngiving back performances, but this situation is unlikely to last<br \/>\naccording to the managers we spoke to. From a top-down<br \/>\nperspective, new opportunities and more mispricing have<br \/>\nresulted result from the current conditions while bottom-up<br \/>\nstock pickers get ready to pick up the pieces during the<br \/>\nupcoming Q2 earnings season\u201d<\/em> says Stefan Keller, Head of<br \/>\nManaged Account Platform Research &#038; External Relations at<br \/>\nLyxor AM.<\/quote><\/p>\n","protected":false},"excerpt":{"rendered":"<p>All Lyxor Indices ended the month of June in negative<br \/>\nterritory, worst index performers were the CTA Long Term<br \/>\n(?2.64%), the Lyxor Long\/Short Equity Market Neutral Index<br \/>\n(?2.45%) and the Long\/Short Equity Credit Arbitrage Index<br \/>\n(?2.40%)..<\/p>\n","protected":false},"author":20,"featured_media":29417,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1470],"tags":[1687,1743,1655,1658,1723,1690,1699,1672],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/29419"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=29419"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/29419\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/29417"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=29419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=29419"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=29419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}