December Commentary

January 19, 2018



Long/short equity strategies provided solid returns as the House and Senate versions of the Tax Cuts and Jobs Act were reconciled and signed into law. Sectors that will benefit the most from tax cuts, such as telecom and consumer discretionary, had strong performance. The Fund’s long/short equity performance lagged due to higher exposure to information technology and health care, sectors that will not benefit as much.

Event driven strategies bounced back with positive performance. Announced
merger and acquisition volume for December was the highest since March, and included a major media transaction. Activity is expected to remain robust as acquisitions are still one of the more attractive means for corporations to generate growth. Additionally, enhanced earnings from tax reform will add to the high current cash balances available for deals.

Relative value strategies had modest positive performance, as investment grade credit spreads moved tighter. High yield spreads moved slightly wider, however, while short term interest rates were higher in response to the FOMC’s rate hike.

Macro strategies had strong performance, led by the Fund’s systematic strategies. Long exposure to equities continues to be a major driver as large cap stocks rise. Exposure to energy also contributed, as oil rallied more than five percent. Industrial and precious metals had significant gains, adding to the strategy returns.

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