\nwere dispersed. Though exposures to rates and equities usually cost, they recorded gains in FX. CTAs
\nfared better with gains in short commodities, offsetting their losing long equity allocation.<\/p>\n
Event-Driven funds were resilient.<\/strong> Special Situations funds benefitted from their tilt to non-cyclical sectors. Beta was the main L\/S Equity funds\u2019 driver.<\/strong> The summer air-pocket overshadowed a strong U.S. earnings However, returns were more in-line with EPS announcements with notable single stock discrimination.
\nTheir activist positions were also resilient: the presence of a fundamental catalyst helped weather the shortterm
\nvolatility. Merger Arbitrage continued to benefit from several bidding wars. They remain under-invested
\nand tend to favor complex operations while remaining shy of the mainstream low-yielding deals.<\/p>\n
\nseason. Strong top-line growth and an elevated share of earning beats were not rewarded in markets. A
\nmajority of stocks headed down after their EPS announcement. Dominated by sector moves, stock
\ndifferentiation was tame. The contribution from alpha was poor for U.S. funds. Similar conditions also
\nprevailed for Japanese managers. By contrast, the European season was weaker. Growth numbers were
\ndecent but did not surprise strongly, with a higher Euro and a cyclical peak driving revisions down.<\/p>\n
\nFollowing a strong H1 and a recovery from the June factor rotation, managers are likely to reduce their
\nexposure and lock in profits. <\/p>\n
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