April confirmed positive for hedge funds

The Lyxor hedge fund Index was up +0.8% in April, bringing year-to-date performance to +3.2%. Twelve Lyxor Strategy Indices out of 14 ended the month in positive territory, led by the Lyxor L/S Equity Market Neutral Index (+3.9%), the Lyxor CTA Long Term Index (+3.0%) and the Lyxor Merger Arbitrage Index (+1.5%).

Risk assets mostly rallied in April after a modest sell off in the beginning of the month and most hedge fund strategies generated positive returns for the month.

“Economic data continues to paint a picture of a mixed recovery with disappointing data in Asia and Europe and shallow growth in the U.S. Equity markets corrected about 5 to 10% in mid-April due to disappointing macro news but data in the second half of the month rebounded slightly,” the firm said.

Companies on average beat EPS estimates by 6% whereas the pace was
closer to 3% at the start of the earnings season. Central banks also reminded investors that accommodative policies can be further eased if data remains weak. Risk assets rallied after the Federal Reserve noted it may expand QE if the data warrants it. The ECB was also more dovish than investors expected.

Strategy-wise, L/S equity funds generated positive returns in April and generally benefitted from the rally. Variable and long bias strategies were up 0.4% and 0.6% respectively benefitting from net long exposure to the market.

L/S Equity Neutral strategies were up 3.9% and showed the best performance in April. Correlation among stocks remains low at about 30% and continues to provide a fertile environment for stock picking on both the long and short side.

Meanwhile, positive returns for the industry were confirmed by the positive performance of  the Eurekahedge Hedge Fund Index which was up 1.09% during the month.

Asia ex-Japan hedge funds outperformed underlying markets for second consecutive month Eurekahedge is currently tracking more than 250 funds that have delivered over 15% year-to-date.

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