Investment Strategies
Man Group Says Current Focus On Macro Threats Creates Opportunities
Man Group, the world’s largest listed hedge fund business, predicts investors' current focus on macro-economic problems such as debt default risk has led to a narrowing of prices between “good” and “bad” stocks, eventually creating opportunities for value-hunters.
Delivering its verdict on July, the UK-listed firm said hedge fund performance was “mixed” in a volatile environment created by fears about sovereign debt in the US and eurozone, and aggravated by low summer volumes in markets.
On a brighter note, managed futures rebounded sharply in July, profiting from long fixed income positions, as well as from having maintained relatively high levels of risk, Man Group said.
Global macro managers posted gains in fixed income, while trading in commodities also proved favourable, said Man Group, which managed $71.0 billion of assets as at the end of June. The total hedge fund industry is estimated to hold around $2 trillion in assets.
“However, profits were comparatively subdued as managers remained cautiously positioned, especially relative to managed futures managers. Outside of managed futures and global macro, returns were relatively flat,” Man Group said.
“Global macro managers also bounced back in July. However, many managers were running at reduced risk levels as they waited for a clearer picture on major macro issues, leading to more muted returns. The best performers over the month tended to be those with more bearish outlooks. Emerging market-focused global macro managers posted small positive moves over the month, with commodities-focused managers also doing well,” it said.
Man Group said that “relative value” funds were “generally flat” in July. The flat return masks dispersion amongst sub-styles and came amidst a backdrop of growing market uncertainty even before the turbulence of early August, it said.
Some of the worst results came from convertible bond managers, due to a drop in investor risk appetite and falls in equity markets; conditions were more favourable for credit arbitragers after market turbulence in June.
