Hedge funds hungry for more risk 22 March 2016Paris Reporter: Drew Nicol
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Hedge funds are slightly revising up their risk appetite after reassurance from the US Federal Reserve on the building consumer price index, according to Lyxor’s Weekly Brief.
The increase in the consumer price index has contributed to depreciate the dollar against major currencies and fuel risk appetite.
Janet Yellen, Federal Reserve chair, added her voice to a chorus of dovish sentiment coming from the European Central Bank and Bank of Japan, which led Lyxor’s median equity beta, based on Lyxor’s sample of hedge funds, to rise to 15 percent from below 10 percent a few weeks ago.
Lyxor was quick to point out that risk appetite remains well below usual levels of 30 percent, suggesting that hedge funds remain defensive and unconvinced by the sustainability of the current rally.
Emerging markets have benefitted the most, with all emerging market segments, including equities, foreign exchange and rates, rallying.
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