{"id":62116,"date":"2017-04-04T00:40:00","date_gmt":"2017-04-03T22:40:00","guid":{"rendered":"http:\/\/beta.next-finance.net\/news\/stellar-quarter-fueled-event-driven-returns\/"},"modified":"2019-12-31T01:51:27","modified_gmt":"2019-12-31T00:51:27","slug":"stellar-quarter-fueled-event-driven-returns","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/news\/stellar-quarter-fueled-event-driven-returns\/","title":{"rendered":"Stellar Quarter Fueled Event-Driven Returns"},"content":{"rendered":"

The reports of the \u201cTrump trade\u201d death have been greatly exaggerated. <\/strong> Since the failure of
\nthe U.S. administration to repeal the Affordable Care Act, risk assets rebounded healthily.
\nThe MSCI World is almost back to an all-time high and cyclical sector such as consumer
\ndiscretionary, materials, industrials and financials outperformed last week in the U.S. and
\nEurope. Similar encouraging signals were also apparent in rates and FX. The dollar index
\nrebounded while the Treasury curve steepened. Overall, it can be inferred that market
\nmovements signal that the confidence in the economic momentum remains intact.<\/p>\n

Hedge funds were also up during the period under review.<\/strong> The Lyxor Hedge Fund Index
\nwas up +0.2% last week, +0.5% in March and +1.1% in Q1. Most strategies were up in Q1,
\nwith Event-Driven outperforming and CTAs underperforming. Within Event-Driven, special
\nsituations funds are leading the pack. Activists have particularly thrived, with leading
\nplayers in this space up in the range of +4-5% year to date. Meanwhile, market neutral L\/S
\nequity funds extended their recovery last week. The Lyxor L\/S equity market neutral index
\nis up +3.3% year to date after having delivered disappointing returns last year.<\/p>\n

From our perspective, Event-Driven remains a highly attractive strategy going forward.<\/p><\/blockquote>\n

Exposures are balanced between cyclical and defensive sectors (though there has been a
\ntilt toward adding to cyclicals lately), thus preventing any major reversal in market optimism
\nfrom causing losses on Event-Driven portfolios. CEO confidence is at a decade high which
\nis likely to translate into stronger corporate activity (see page 2). Finally, several elements
\nrelated to the new U.S. administration may also prove to be supportive. Fiscal reform, if
\nimplemented in the coming months, should be supportive for sectors such as
\ntelecommunications or consumer staples (they currently pay a higher effective tax rate than
\nother sectors) that rank high in Event-Driven portfolios. Meanwhile, the newly appointed
\nchairman of the Federal Communications Commission, Ajit Pai, has repeatedly called for a
\nlight-touch, free market approach to regulation. This is likely to make the environment for
\nEvent-Driven managers more predictable and less sensitive to deal breaks.<\/p>\n

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