Lyxor Asset Management

2017 Top 400 Ranking: 112http://www.lyxor.com

Request More Information

Spring Rally for Merger Arbitrage

Hedge Fund Briefs – May 2017 

All eyes were focused on Europe in April, ahead of the presidential election in France. Election polls were eventually reliable, and the victory of Emmanuel Macron over Marine Le Pen was a relief for European risk assets, both equities and high yield credit. In parallel, the Euro appreciated vs. USD as Frexit fears receded and economic growth in the U.S. slowed down.

These market conditions led to contrasting performances across hedge fund strategies. The Lyxor Hedge Fund index was slightly down in April (-0.2%), as a result of negative returns experienced by Global Macro and CTA strategies. Both strategies were hampered by short positions on European currencies vs. USD. In parallel, momentum strategies were penalized by the announcement of general elections in the UK, which caused trend reversals across UK assets.

On a positive note, Event Driven, Fixed Income Arbitrage and L/S Equity indices were all positive in April. In particular, the Lyxor Event Driven index outperformed, up 2% in April and 4.2% year to date (as of early May). Overall, higher positions on cyclical sectors such as financials and materials were rewarding. Within Event Driven, Merger Arbitrage funds took the lead in April, buoyed by positions in Actelion, NXP semiconductors, Syngenta and Alere.

Going forward we prefer L/S Equity and Event Driven strategies to CTA and Global Macro. Stockpickers should benefit from the lower correlation between stock (and sector) returns in the U.S and in Europe. Meanwhile, trend following conditions remain constrained by the lack of firm trends in several asset classes. Finally, within Global Macro, we have a preference for multi asset/diversified managers compared to fixed income or foreign exchange specialists. Expectations of higher bond yields and dollar appreciation are less straightforward as the market reevaluates the optimism that followed the U.S. election.

Tags

Head Office
Tours Société Générale
17 Cours Valmy
Paris La Défense
F-92987
France
Company website:
http://www.lyxor.com
Parent Company:
Société Générale
Year Founded:
1998
No. of investment offices worldwide:
12

Browse this manager's…

What’s new

  • athens in the re starting blocks

    Athens in the re-starting blocks

    White papersFri, 19 Jan 2018

    Greek assets have potential to perform this year. We like Greek equities best.

  • etf money monitor january 2018

    ETF Money Monitor: January 2018

    White papersThu, 18 Jan 2018

    ETF flows slow, but fly past annual record

  • ls equity get ready for an intense earning season

    L/S equity get ready for an intense earning season

    White papersMon, 15 Jan 2018

    The receding concerns about the Chinese soft landing, bright economic prints in most regions, prospects of a capex revival, and more hawkish central banks provided risk assets another leg of rally, while bonds sold off. 

  • extra time

    Extra Time

    White papersMon, 8 Jan 2018

    U.S. sustained expansion and the recovery gaining strength in the Eurozone and Japan should preserve global growth while the drag from China’s controlled slowdown could be modest. We anticipate milder returns in cyclical commodities. 

  • 2018 hedge funds outlook

    2018 Hedge Funds Outlook: Still favoring Bottom-Up strategies

    White papersMon, 8 Jan 2018

    During the first week of 2018, Event Driven and diversified L/S Equity funds outperformed. The fallout from the US tax reform spread and boosted event positions, as well as L/S equity’s cyclical stocks. 

Search all our content