2019 Hedge funds outlook favoring low beta as a start

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The weekly Brief

2018 ended with investors hesitating between several scenarios, which led to widely different performance patterns. Summarized below, none can fully explain alone recent prices actions. We do not expect a recession, rather we anticipate a global growth deceleration in 2019. Window dressing and systematic trading likely amplified market moves, but we expect a chaotic recovery as investors look for evidence of stabilizing economic releases, greater clarity on Brexit and trade wars, and assurances from the Fed. Uncertainty and volatility could remain elevated early this year. Later, a more sustainable U.S.-China truce and the verdict on Brexit could open more buying opportunities and lead to more fundamental pricing. Overall, alternative strategies appear increasingly attractive, however, dispersion across strategies may be high. As we start 2019, we are positioned around three axes: reduce exposure to high beta strategies, reduce sensitivity to Momentum, and leverage on the U.S. M&A cycle