Arbitrage

While the bitcoin bull run in 2017 was largely driven by retail investors, the 2020 surge appeared to be driven by a wider set of investors, including institutionals.

Several hedge fund strategies have momentum biases, in particular L/S Equity, and CTAs. Considering the fact that this rotation took place in a bullish environment, most hedge fund strategies ended the week in positive territory.

Momentum is a strategy which buys stocks trending higher and sells stocks on a downtrend within an index. It is systematic and has no considerations for earnings, valuation, or other fundamental metrics such as dividends.

The market crash that began in March sent the spread of EM debt (for the hard currency aggregate) to nearly 700 bps. It is now only 30 bps away from the pre-crisis level. This spread tightening reflects the ongoing economic recovery EM countries. Trends in Covid-19 are taking the right direction, except for India.

The Special Situations strategy went through a roller coaster since February. Typically, due to their long structural market beta, managers tend to underperform in risk-off episodes. However, as they also tend to look beyond short-term volatility, they usually rebound faster.