Stone Mountain Research Perspective Vol. 49

Originally published on 28 March 2017

After a strong start into 2017, hedge funds experienced their first month of struggle, with the biggest portion of losses to be driven by CTA and macro strategies. Relative Value and event-driven strategies also had a negative month, opposed to equity hedge funds that continue their solid performance so far, this year. Investors wait for the first “test” of the U.S. presidential power to implement his agenda, with the focus being on the healthcare bill vote, but the main concern of investors is the corporate tax cut promised and increased infrastructure spending. The new presidential era elevated volatility in the U.S. markets with VIX being at its highest levels since January. Oil prices rose amid expectations that supply cuts will boost the oversupplied market. An interesting economic scenery is being shaped if we account for the upcoming elections of major European economies and further rate rises by the FED, which are anticipated this year. The biggest winner of this scenery is private debt, which continues its strong fundraising momentum. More institutional money is being poured into the asset class, which nears $600bn according to Preqin, increasing the competition and potentially leading to yield compression. Those symptoms are already happening in private equity, with most investors looking to allocate more in the hedge fund space and niche, less-crowded strategies, than in private equity. European real estate is showing signs of growth according to Savills and especially in UK, Germany, France, the Netherlands and the Nordics. Finally, Bitcoin is facing some scrutiny from Chinese and EU legislative authorities, following the disapproval of the SEC regarding the first bitcoin ETF launch. The third week of March was critical for bitcoin as its price fell under $1000, but in case the risks are merely mitigated in the asset class, it is expected to grow exponentially.

Stone Mountain Capital In-House Indices vs. Major Benchmark Indices Hedge Funds and Long Only  
As Per YTD February 2017,  Stone Mountain Capital Research

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