Beta First, Alpha Second
View Newsletter Emboldened by dramatic monetary and fiscal stimulus, global equities rebounded strongly in the second quarter on hopes of a V-shaped economic recovery. Despite lingering economic worries, the S&P 500’s 20.1% surge was the biggest quarterly gain since 1998, while MSCI Emerging Markets’ 18.1% jump was its largest since 2009. However, neither fully recovered […]
How Hedge Funds and MACs Did in 4Q19
View PDF Twenty years ago, U.S. stock prices were hitting record highs with nosebleed valuations based on a strong economy supported by rising corporate earnings and increasing productivity. Treasury bills then were yielding almost 5% (or 2% real), as the Federal Reserve was slowly taking away the market’s punch bowl by raising rates. Meanwhile, a […]
Macro Shines; Equity Alpha Shaded
View PDF With fears of softening manufacturing hanging over global equity markets, particularly in Asia and Europe, many central banks actively cut rates to allay economic concerns in the third quarter. Falling yields for sovereign debt and higher-rated credits also helped to soothe concern about the prolonged trade battle between the U.S. and China. Regional […]
Hedge Funds Feed on Market’s Cognitive Dissonance
As the global economy slowed further in the second quarter, central banks aggressively talked of easing again. Although resilient consumer spending continued to support corporate earnings, company outlooks were less positive due to growing trade war concerns. Across the capital markets, the cognitive dissonance within the investor community trying to interpret these mixed economic signals […]
The Pause That Refreshes
At the end of last year, the Federal Reserve quickly pivoted from its longstanding tightening narrative to a pause. With the U.S. economy still strong but slowing, the Fed said it needed “some time” to decide whether to raise or lower rates next. For most capital markets, that pause was indeed refreshing, as an old Coke […]
Hot Markets Go Cold Turkey
In chilling markets, the mix of volatile prices and tightening liquidity became too hot for many hedge funds to handle. And beset by negative betas in both traditional and alternative markets, all of the Callan Multi-Asset Class (MAC) Style Groups struggled in the fourth quarter’s risk-off mode.
Puttin’ on the Ritz … With Open Protocol
View Jim’s Paper Hedge funds and other multi-asset class (MAC) strategies with long and short exposures are a tough act to follow…at least for many fiduciaries investing in these strategies. To showcase their portfolios, managers often use a proprietary language that fits their unique strategy. Unfortunately, they then don’t sound like each other, making one […]
Hedge Funds Grind Ahead Amid Tightening Liquidity
The market environment for hedge funds offered conflicting signals in the third quarter. Despite weakening economic strength abroad, particularly in China, the U.S. economy marched stridently ahead, still energized by recent tax cuts and falling unemployment. Better-than-expected corporate earnings pushed up U.S. stocks, despite a marginally stronger dollar. Anticipating inflationary risks, the Federal Reserve pressed […]
Boy – That Escalated Quickly!
The market narrative of strong corporate earnings, falling unemployment, and tax reform had pumped up expectations for risk assets heading into 2018. However, hints that an overheated U.S. economy may be unable to absorb significant fiscal stimulus ahead spooked markets in the first quarter, leading to a spasm of risk-off behaviors. Despite the quarter’s rocky […]
Vexing Volatility
Market volatility spiked in February, coinciding with declines for broad equity and fixed income indices. Callan surveyed leading multi-asset class (MAC) strategy providers to understand how the products reacted in this newly volatile environment.