{"id":57429,"date":"2016-10-20T02:55:00","date_gmt":"2016-10-20T00:55:00","guid":{"rendered":"http:\/\/beta.next-finance.net\/news\/macro-funds-patience-on-fed-and-brexit-pays-off\/"},"modified":"2019-12-31T01:12:24","modified_gmt":"2019-12-31T00:12:24","slug":"macro-funds-patience-on-fed-and-brexit-pays-off","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/news\/macro-funds-patience-on-fed-and-brexit-pays-off\/","title":{"rendered":"Macro funds\u2019 patience on Fed and Brexit pays off"},"content":{"rendered":"

Nervousness rose last week as investors continued to prepare for a December Fed hike – increasingly likely – and ahead of the US elections. US rates, the dollar and breakevens progressed, while equities dropped slightly. Meanwhile, markets are waiting for a confirmation that the ECB, BoJ and BoE actually shifted to a less dovish stance and pushed back NIRP (negative interest rate policy). In that context, trading volumes remained low, and rotations in and out of rate sensitive sectors were frequent.<\/p>\n

Hedge funds were boosted by the strong performance of Global Macro funds. Their short on the pound positioning was a major boost, which was further helped by their short stance on the Euro and US bonds.<\/p><\/blockquote>\n

By contrast CTAs underperformed on their long bond positions.
\nSector rotations hit L\/S Equity Market Neutral funds negatively. The stress on equities eroded the longest bias funds\u2019 returns.<\/p>\n

Doubts regarding the benefits of quantitative easing are intensifying. Meanwhile developed
\nmarkets\u2019 central banks seem to be shifting toward a less dovish stance. Evidence of this
\nshift in the coming monetary meetings would be a strong positive for hedge funds. Their
\nalpha generation actually suffered from QE and the prevalence of speculative drivers.<\/p>\n

With that perspective in mind, we are prepared to reweight more firmly the whole Global
\nMacro group. Fewer monetary-driven sector rotations also make us more comfortable with
\nour slight overweight on L\/S Equity neutral funds.<\/p>\n

For now, we remain neutral on CTAs. The trend-following environment hasn’t recovered yet
\nfrom the shifts in rates. We wait for a stabilization in these markets.<\/quote><\/p>\n

We also maintain our neutral stance on L\/S Credit funds, which are constrained on both
\ntheir beta and alpha. However we still favor Multi-Credit Arbitrage. Finally, we reiterate our
\npreference for Merger over Special Situations and distressed funds. The former face higher
\nrisks, but attractive spreads.<\/p>\n

\"ctas_increase_risk_taking_while_global_macro_managers_stay_cautious.jpg\"<\/a>