{"id":40834,"date":"2015-03-12T07:13:12","date_gmt":"2015-03-12T06:13:12","guid":{"rendered":"http:\/\/beta.next-finance.net\/news\/sucessfully-riding-the-thematic-reversal\/"},"modified":"2015-03-12T07:13:12","modified_gmt":"2015-03-12T06:13:12","slug":"sucessfully-riding-the-thematic-reversal","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/news\/sucessfully-riding-the-thematic-reversal\/","title":{"rendered":"Sucessfully riding the thematic reversal"},"content":{"rendered":"

The gradual stabilization in oil prices, sparks of economic
\nimprovements in Eurozone and multiple evidences of central banks
\nefforts all contributed to ease deflation fears. It triggered a broad
\nand rapid rotation in most of the assets and sectors tied to the
\nthemes which dominated over the last few months.<\/strong> Recovering risk
\nappetite supported strategies most exposed to risky assets, in
\nparticular the Event Driven and the L\/S Equity Long Bias funds.
\nShort term CTAs\u2019 models also strongly benefitted from the market
\ntrends rapidly emerging. Conversely, L\/S Equity Market Neutral and
\nlonger term macro funds endured temporary turbulences. <\/p>\n

The Lyxor L\/S Equity Variable and Long Bias funds were up
\n+0.5 and +2.6% respectively.<\/strong> US funds outperformed and
\ngenerated the greatest alpha, in particular through their exposure to
\nthe energy, financial and healthcare sectors. European focused
\nfunds remained cautious. Following a number of false dawns and
\nreal scares, they only gradually participated in the rally in Eurozone.
\nOver the month they materially raised their allocation to industrials
\nand mid caps, while taking profits on the consumer sectors and to
\nsome extent on financials. These changes were consistent with
\ngreater confidence toward the economic dynamic in the region,
\nwhile taking profits on the oil and QE trades. EM focused funds
\nproduced returns in line with their underlying market, flat over the
\nmonth. By month-end their aggregate exposures displayed a
\ndominant allocation on Asian cyclical sectors. <\/p>\n

The Lyxor L\/S Equity Market Neutral index was down as much as –
\n0.9%. The reversal in themes which dominated these last months
\n(the oil scare, the deflation fear and EU de-risking) resulted in a
\nsubstantial and rapid sector rotation out of the defensive sectors
\ninto cyclical stocks. The ones without sector neutrality
\nunderperformed the most. <\/p>\n

The recovery in Event Driven funds accelerated in February.
\nThe drivers that played so severely against the strategy in the
\nsecond half of last year were powerful contributors to their recovery
\nin February.<\/quote>
\n Merger arbitrage funds were the first ones to rally,
\nprimary beneficiaries of resuming investors\u2019 risk appetite. A
\nmeaningful deal spread tightening and completion of some
\noperations contributed to the strong returns. An honorable load of
\nnew announcements allowed funds to refresh their portfolios. Of
\nnote, the Valeant acquisition of Salix ($14.5bn) or the purchase of
\nHospira by Pfizer ($17bn). They were up +2.6% over the month.<\/p>\n

Special situation funds were up as much as +5.3% on average.
\nThey benefitted from a strong tailwind supporting activist positions.
\nThe Dow, Hertz, or Walgreens positions, which got under strong
\npressure during most of last years\u2019 H2, were strong contributors.
\nWhile most managers cut the lion’s share of their energy exposure over the last months, their residual positions (less than 10%) were
\nyet a significant contributor to performance. These benefitted from
\na stabilization in oil prices and in the energy credit sector. Lower
\nliquidity pressure and risk appetite also reached out to distressed
\nfunds, boosted by a clear cut rally in leveraged loans, HY and
\ndistressed bonds. In particular exposures to General Motors,
\nPinnacle and MBIA all rallied strongly. <\/p>\n

The Lyxor L\/S Credit Arbitrage index was up +1.4%. Most
\nfunds were supported by a recovery in global credit markets.<\/quote><\/p>\n

Substantial inflows poured back into the space. Easing concerns
\non deflation and a stabilization in oil prices gave some air to both IG
\nand HY markets \u2013 especially in the non-energy segments. Funds
\nfocusing on European markets outperformed. They benefitted from
\nthe ECB\u2019s QE prospects being priced in periphery spreads. They
\nalso extracted alpha out of the Greek situation, though with
\nvolatility. The intensifying Fed debate ahead of the March FOMC
\nweighted on EM credit in the early part of the month. <\/p>\n

The drivers for the strong performance of the Convertible Arbitrage
\nStrategy were similar. The easing pressure on liquidity, tightening
\nspread and rallying equity markets provided strong tailwinds. The
\nstabilization in oil prices had a strong impact on HY convertibles.
\nPrimary markets rebounded after several months of poor activity,
\npositively contributing to the strategy\u2019s return. Funds focusing on
\nEurope also benefitted from the ECB reflation being priced in. <\/p>\n

The Lyxor CTA Long Term Index was down -0.2% over the
\nmonth.<\/strong> The thematic reversal in oil, inflation and growth stances
\nresulted in substantial losses in their fixed income and commodity
\nexposures. These were only partially offset by their long equity
\npositions. A pause in the USD strength also detracted
\nperformance. The last week of February saw renewed weakness in
\noil and yields. This allowed LT models to recoup most of the lost
\nground. <\/p>\n

In contrast, ST models quickly captured the trend reversals
\nunfolding over the month and outperformed not only their long term
\npeers, but all other hedge fund strategies.<\/quote><\/p>\n

Global Macro funds tend to be adversely impacted by turning
\nmacro themes. However, they were only marginally unsettled by
\nthat of February.<\/strong> A majority of them were adequately positioned for
\nan inflection in yields. Their long equity positions balanced losses
\nrecorded in commodities (both in energy and precious metals).
\nFunds focusing on commodities underperformed multi-strategy
\nand quantitative funds. Sovereign Fixed Income Arbitrage funds yet
\nagain recorded strong performance, boosted by reflation initiatives
\nannounced by multiple central banks.<\/p>\n

\u00ab It\u2019s now time to be selectively directional, in reflation zones
\nespecially. Global FX and rates , likely to be the most active playing
\nfields, would also offer appealing trading opportunities.\u00bb<\/em>, says
\nJean-Marc Stenger, Chief Investment Officer for Alternative
\nInvestments at Lyxor AM.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Lyxor Hedge Fund Index was up +1.7% in February. 10
\nout of 12 Lyxor Indices ended the month in positive territory, led by
\nthe Lyxor Special Situation Index (+5.3%), the Lyxor CTA Short
\nTerm Index (+3.5%), the Lyxor Convertible Bond Arbitrage Index
\n(+3.1%). <\/p>\n","protected":false},"author":20,"featured_media":40832,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1470],"tags":[1687,1655,1690,1651,1662,2243,1672],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/40834"}],"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=40834"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/40834\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/40832"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=40834"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=40834"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=40834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}