Philippe Ferreira, senior cross asset strategist at Lyxor Asset Management, has detailed the latest views of Lyxor’s managed account platform research team.
He explained that market conditions remain challenging, especially in the US because of the 3% drop the S&P 500 faced during the period under review.
“Part of this movement was related to adverse developments in the healthcare sector which suffered a severe drawdown after Hillary Clinton hinted that she would reform the sector and introduce price curbs if elected next year. This follows the controversial decision by a pharma company to significantly raise the price of decade-old drugs,” Ferreira stressed
Hedge fund performance was therefore negative in Q3 2015, with significant differences existing across strategies.
Ferreira highlighted CTAs and macro managers continued to outperform as a result of their long positions on fixed income.
“L/S Equity managers were quite resilient, though US managers suffered in comparison to their European and EM counterparts. Finally, event-driven funds were down as a result of their exposure to the healthcare sector,” he added.
Lyxor’s managed account platform research team still favours CTA and macro strategies in the current environment.
“The September establishment survey data signaled an easing in the pace of nonfarm payrolls (+142k in September vs August, below expectations) which continued to support fixed Income. As a result, the rally in CTAs is ongoing. We are also overweight variable biased and market neutral L/S Equity funds which have delivered positive returns lately,” Ferreira explained.
Lyxor also recommend to keep a stance on event-driven strategies.
“Healthcare names have partly recovered since the hit a few days ago and the sector is among the few ones that have not experienced a downward revision in near term earnings expectations. The sector is immune to China’s growth deceleration and to the recent slump in commodity prices,” Ferreira said.