Our views on the strategy stay
\nrelatively defensive, though we recently upgraded long biased L\/S Equity from Underweight to Neutral to capture
\nsome beta in portfolios.<\/quote><\/p>\n
The latest round of business surveys helped to devise a clearer macro picture globally. According to composite PMI
\nindices, the global economy bottomed out in January 2019 and has experienced a mild rebound since then. PMI data
\nreleases last week pointed to an unexpected expansion in China\u2019s manufacturing sector, which fueled risk assets.<\/p>\n
However, the German industry was still in deep contraction mode in March and the ECB is trying to figure out which
\nunconventional tools it can now use to stimulate the economy (a tiering system for the remuneration of deposits?).<\/p>\n
Despite the mixed signals at the level of individual countries, the rally in risk assets continues unabated on the back
\nof improving economic prospects and looser monetary conditions.
\nIn the hedge fund space, CTAs\u2019 winning streak continues (+1.1% last week according to the Lyxor CTA UCITS peer
\ngroup). CTA strategies that exclude commodities from their investment universe outperformed (+5.9% vs. +3.5% yearto-date for CTAs including commodities). CTAs\u2019 long positions on European fixed income have been rewarded by the
\npoor macro numbers in Germany which dragged bond yields lower. The strategy is now up +5.4% since the trough at
\nend-January but the road to recovery is still long. The drawdown since the previous peak in March 2015 is in excess
\nof 15%.<\/p>\n
Concurrently, L\/S Equity strategies lagged behind. Both Directional and Market Neutral L\/S Equity strategies delivered
\nmeagre returns in March despite elevated stock dispersion on both sides of the Atlantic. Flows into offshore hedge
\nfund strategies were back in positive territory in February according to eVestment. However, investors\u2019 appetite for
\nL\/S Equity remains low. Both directional and Market Neutral L\/S Equity strategies experienced substantial outflows in
\nJanuary and February. Based on our Peer Group of 243 strategies, the five worst performing ones in March were
\nmostly L\/S Equity, both directional and Market Neutral in a range of -3.3% to -4.3%. <\/p>\n
Our views on the strategy stay
\nrelatively defensive, though we recently upgraded long biased L\/S Equity from Underweight to Neutral to capture
\nsome beta in portfolios.<\/quote><\/p>\n
![\"-235.jpg\"](\"https:\/\/www.next-finance.net\/http:\/\/beta.next-finance.net\/wp-content\/uploads\/2019\/04\/235.jpg\")
<\/a>