Lyxor’s managed account platform research team said in its weekly brief focusing on hedge funds that the option of a Grexit has been now forgotten and that markets conditions in Europe have “normalised in the wink of an eye.”
The asset manager underlined that the growing risk appetite in Europe has benefitted to the Global Macro managers who maintained their long European equities exposure during the turmoil.
“Most managers had kept their bullish stance on Europe, hoping for a Greek resolution and not anticipating any contagion to peripherals.”
“We are now confident that European equities are set to achieve mid-single digit returns over the next 12 months. This would be an outperformance relative to US equities, which, we believe, are due to deliver low single digit returns over the next 12 months,” commented Lyxor.
According to the firm, CTAs have underperformed because of their short stance on European equities and commodities. Lyxor said they were “unable to capture the equity rebound.” The rise in sovereign bonds in both core European countries and the US is also considered as an explanation of this underperformance.
The managed account platform research team has found out that Event Driven and L/S Equity funds have experienced a healthy rebound.
“Almost all equity indices rallied around the world and as a result directional managers took advantage of such an environment. Meanwhile, market neutral players, particularly in Europe, did not directly benefit from it,” Lyxor commented.
The firm explained that the best US performer has benefitted from its exposure to Europe through ETFs and to the healthcare sector.
Asian managers are particularly concerned by the rebound as Chinese authorities have implemented measures to tame market instability.
Lyxor has around 80 funds on its managed account platform with $8bn (€7.36bn) of assets under management as at 31 May.