{"id":70220,"date":"2018-03-22T06:30:14","date_gmt":"2018-03-22T05:30:14","guid":{"rendered":"http:\/\/beta.next-finance.net\/news\/l-s-equity-stays-ahead-of-the-pack\/"},"modified":"2020-01-01T22:16:51","modified_gmt":"2020-01-01T21:16:51","slug":"l-s-equity-stays-ahead-of-the-pack","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/news\/l-s-equity-stays-ahead-of-the-pack\/","title":{"rendered":"L\/S Equity stays ahead of the pack"},"content":{"rendered":"

Recent data releases in the U.S. have contributed towards stabilizing fixed income markets. Recently
\nreleased data on wages and retail sales for February were below expectations, while the consumer price
\nindex in February grew just in line with the consensus at 0.2% month-over-month and 2.2% year-over-year.<\/p>\n

In this context, 10-year Treasury yields have stabilized around 2.85% and concerns over inflationary
\npressures and additional monetary tightening than currently priced in by the market have somewhat abated.
\nThis has been supportive for risk assets, in particular in the U.S. and Emerging Markets.<\/p>\n

In the hedge fund space, this has contributed towards extending the winning streak of L\/S Equity and
\nRelative Value strategies. So far during the first quarter, both have outperformed the remaining hedge fund
\nstrategies. On the contrary, CTAs continue to lag behind, to the extent that market turbulence in February
\nforced them to deleverage their portfolios. This has prevented them from capturing the market recovery.<\/p>\n

Going forward, we maintain firm convictions on Event-Driven.<\/p><\/blockquote>\n

In that regard, it is important to note that M&A
\nactivity has started 2018 on very strong footing in the U.S. According to Dealogic, U.S. M&A is up 52%
\nyear-to-date compared to the same period last year, at USD 378bn. Health care and technology continue to
\nbe the sectors experiencing the stronger pace of consolidation, with volumes worth respectively USD 107bn
\nand USD 74bn year to date (versus USD 37bn and USD 32bn respectively during the same period in 2017).<\/p>\n

We also maintain an overweight stance on Fixed Income Arbitrage, a strategy that has delivered attractive
\nreturns on a risk adjusted basis in the past and provides protection against rising bond yields. In the L\/S
\nEquity space, we prefer U.S. funds compared to European funds. U.S. tax reform might actually generate
\nhigher dispersion between stock returns and greater opportunities for L\/S funds to generate returns on both
\ntheir short and long book. Finally, we downgrade CTAs to UW.
\nWe believe that market conditions could
\nremain unstable and trendless going forward. Meanwhile, the rising correlation regime between equities and
\nbonds is also a headwind.<\/quote>
\n However, we acknowledge the fact that the deleveraging of their portfolios
\nimplies that they are less sensitive to trend reversals and their performance should thus be less volatile
\ngoing forward than it was lately. <\/p>\n

\"event-driven_to_benefit_from_stellar_m_a_volumes_-_ctas_to_suffer_from_higher_correlation_regime.jpg\"<\/a>