Eurekahedge Weekly Commentary

Jun 23 2006 | 9:08pm ET

This week Eurekahedge analyst Rajeev Baddepudi takes a look distressed debt and fixed income funds. The following commentary courtesy of Eurekahedge.

Global financial markets took a steep fall in the second week of May, following an extended spell of benign to rising markets supported by encouraging corporate and economic data. The downdraft was largely attributable to heightened inflation worries coupled with the lack of clear guidance from the Fed and a weakening US dollar, which in turn exacerbated investor risk aversion. Interestingly, however, lowered risk appetites did not translate into rallies in the treasury markets, which continued their sell-off as 10-year yields rose a modest 5 basis points to 5.1% and 5-year yields rose 1 basis points to 5.03%.

The leverage deployed by hedge funds seems to be lesser than in the past, implying limited impact on fixed income markets. The yield curve continues to be relatively flat, as uncertainty in Fed policy and the search for safer assets support the long end of the curve. Furthermore, given that the markets worst-hit by the month's fall were those that saw the biggest jumps in the previous months (i.e. emerging markets, equities, commodities), North American hedge funds were actually the best (or rather the least negative) return-generating (at -1%[1] vs. -1.6% for the composite Eurekahedge Hedge Fund Index), among the regional indices.

Reflecting this, North American fixed income and distressed debt funds posted relatively flat returns for the month, marginally outperforming their respective global indices by 10-20 basis points. Distressed debt managers benefited from healthy activity levels in the high yields market s, while fixed income players found opportunities in the wide trading range of Fed Funds futures (given the uncertainty surrounding future hikes in the Fed rate).


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.