by Summary:
Macroview Long/short equity managers demonstrate positive alpha generation and protect on the downside as markets succumb to China-led global deflation fears. The end of the summer proved rather turbulent when China weakness caused global markets to freefall. Whilst equities worldwide nosedived, long/short equity managers trimmed their exposures only marginally and took advantage of the sell-off to add to core positions or adapt their short books, outperforming markets in relative terms. Popular internet and healthcare names that got hammered in August did of course hurt long books’ returns, especially for US-focused managers. But emerging market weakness and exposure to the cyclicals and oil and gas sectors proved beneficial, offering interesting opportunities on the short side. European-focused managers in particular had suffered in the beginning of the year from the QE-fuelled equity bull market where high intra-stock correlations allowed little space for stock-picking. On the contrary, the Greek and Chinese crises in the summer marked the end of the indiscriminate rally and the return of divergence in equity valuations, that managers were able to exploit both through their long and short books.
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Perspectives Pictet considers the following as important: Macroview
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Macroview
Macroview Long/short equity managers demonstrate positive alpha generation and protect on the downside as markets succumb to China-led global deflation fears. The end of the summer proved rather turbulent when China weakness caused global markets to freefall. Whilst equities worldwide nosedived, long/short equity managers trimmed their exposures only marginally and took advantage of the sell-off to add to core positions or adapt their short books, outperforming markets in relative terms. Popular internet and healthcare names that got hammered in August did of course hurt long books’ returns, especially for US-focused managers. But emerging market weakness and exposure to the cyclicals and oil and gas sectors proved beneficial, offering interesting opportunities on the short side. European-focused managers in particular had suffered in the beginning of the year from the QE-fuelled equity bull market where high intra-stock correlations allowed little space for stock-picking. On the contrary, the Greek and Chinese crises in the summer marked the end of the indiscriminate rally and the return of divergence in equity valuations, that managers were able to exploit both through their long and short books.
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Perspectives Pictet considers the following as important: Macroview
This could be interesting, too:
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Long/short equity managers demonstrate positive alpha generation and protect on the downside as markets succumb to China-led global deflation fears.
- The end of the summer proved rather turbulent when China weakness caused global markets to freefall. Whilst equities worldwide nosedived, long/short equity managers trimmed their exposures only marginally and took advantage of the sell-off to add to core positions or adapt their short books, outperforming markets in relative terms.
- Popular internet and healthcare names that got hammered in August did of course hurt long books’ returns, especially for US-focused managers. But emerging market weakness and exposure to the cyclicals and oil and gas sectors proved beneficial, offering interesting opportunities on the short side.
- European-focused managers in particular had suffered in the beginning of the year from the QE-fuelled equity bull market where high intra-stock correlations allowed little space for stock-picking. On the contrary, the Greek and Chinese crises in the summer marked the end of the indiscriminate rally and the return of divergence in equity valuations, that managers were able to exploit both through their long and short books.
- Looking forward, we expect positive alpha generation to continue, though managers who are able to tactically hedge their portfolios and even move net-short may be better positioned amid a deteriorating macro environment.