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Hedge/event driven mgrs postive in February
05 March 2014
Equity hedge and event driven managers continued to find value in February, says GAM
Most hedge funds posted positive results in February as credit,
fixed income and developed market equities rallied,
which also provided a favourable backdrop for event
driven, equity hedge and relative value strategies.
One contributor to these strategies was managers continuing to
hold their conviction trades, despite January's choppy waters,
according to Anthony Lawler, portfolio manager at GAM. Hedge
funds were up 1.6% for February, as measured by the HFRX Global
Hedge Fund index in US dollar terms.
"Our view that 2014 was likely to prove to be choppy with more
dispersion, and therefore more likely to reward alpha, remained
valid in February. So far this year event driven and equity
hedged managers have outperformed broad equity indices," stated
Year-to-date through the end of February, the HRFX Event Driven
index was up 2.9% and the HFRX Equity Hedge index was up 1.6%,
compared to the MSCI World index up 1.2%, all in US dollar
"Conversely, global macro and CTA managers posted mixed
results - several longer-term conviction trades detracted
from performance, such as long US dollar and the Japan
reflation," he added.
Credit continued to be well supported in February with a lack
of new bond issuance helping to drive existing credit higher as
money flowed into high yield and investment grade names.
GAM's outlook for the rest of 2014 remains unchanged and
investors should be prepared for choppy waters, suggested
"Volatility is likely to continue to be more of a feature this
year, but there are arguably investment opportunities
especially within equity long/short and event driven
approaches. We continue to expect global macro strategies to
find good risk/reward opportunities later in the year as some
trades like Japan reflation re-establish themselves. We are
already seeing green shoots appear because divergences in
global policy paths and growth spell opportunity for alpha in
fixed income and currency markets."