![\"flows_into_alternative_ucits_rebounded_in_june_fuelled_by_fixed_income_strategies.jpg\"](\"http:\/\/www.next-finance.net\/http:\/\/beta.next-finance.net\/wp-content\/uploads\/2017\/08\/flows_into_alternative_ucits_rebounded_in_june_fuelled_by_fixed_income_strategies.jpg\")
<\/a>Risk assets were once again on the rise in July and several asset classes broke records. Last week, the
\nS&P 500 reached an all-time high, while the spot VIX index reached an all-time low. The MSCI World (net
\ntotal return local currency index) is up for the ninth month in a row, which was unseen since 1987.<\/p>\n
Meanwhile, Euro high yield spreads reached 10-year lows according to Merrill Lynch indices. The latest leg
\nof the rally is taking place amid a strong earnings season on both sides of the Atlantic, with U.S. technology
\nstocks leading the pack. In spite of the strong momentum, we fear markets may have jumped the gun on
\nmonetary stimulus and more prudent investors might choose not to chase the rally at this point.<\/p>\n
In the hedge fund space, recent trends can be looked from different perspectives. On the one hand, the
\nstrategies that did well over the recent months and which we have maintained an overweight position for
\nseveral quarters outperformed in July. Event-Driven and Fixed Income strategies led the pack last week, in
\nJuly, and year-to-date. On the other hand, trend following strategies underperformed during all these
\ntimeframes. Overall, considering the elevated weight of CTA and Global Macro
\nstrategies in our indices, the Lyxor Hedge Fund Index was flat in July. CTAs continue to be penalized by
\ntheir commodity allocations as short positions on both energy and precious metals suffered last week.<\/p>\n
Event-Driven is a strategy on which we maintain an overweight stance. Last week, performances were led
\nby the energy, health care and consumer cyclical sectors. Merger Arbitrage outperformed special situations
\nin July and is a strategy that appears particularly appealing in the context of richly valued traditional assets.
\nOver the past five years, the beta of the strategy (vs. MSCI World) was in the 5-15% range, depending on
\nthe index.<\/p>\n
Finally, sustained flows into alternative UCITs in Europe suggest investors are currently diversifying their
\nassets at an elevated pace. The asset class experienced inflows up to EUR 4.5 billion in June and EUR 23
\nbillion year-to-date. This is above the figure observed in H1-16. With regards to flows, the last section of the
\nreport deals with mutual funds domiciled in the U.S. and tracking European equities. Flows into such funds
\nexperienced a reversal recently, suggesting that appetite for European stocks is rising in the U.S.<\/p>\n