Global hedge funds performed better despite weak equity markets in the run-up to the Presidential elections in the US and a depressed global commodities market, Hedge Fund Research said in a note.
But a wide divergence was seen between big funds and small firms due to market uncertainty, indicating size mattered amid volatility.
The HFRI Asset weighted composite index rose 0.61% in October, its fourth consecutive monthly gain.
The HFRI fund weighted index declined by 0.61% but still outperformed both US and global equities by 120 and 140 basis points, respectively, for October. One basis point is one-hundredth of a percentage point.
Event-driven funds thrived, reflected in the 6.79% increase in the HFRI event-driven index.
Results: More firms miss than beat estimates
This results season, more companies have missed estimates rather than beaten them, according to JM Financial Institutional Securities Ltd.
The beats-to-misses ratio for 74 companies that announced results until Friday from the brokerage’s coverage universe of about 160 companies has dropped to 64%.
In the June quarter, the measure was much higher at 106% for the entire universe of 160 companies.
In fact, the average for the last four quarters stood at 83.5% for this set.
According to JM Financial, the number of companies that beat expectations was higher in the auto, non-banking financial companies and telecom sector; while misses were higher than beats in building materials, consumers, information technology, midcaps, energy, industrials and cement.
Spread between bond and earnings yields narrows
The spread between India’s 10-year bond yield and Nifty earnings yield hit its lowest level in October since the emerging market sell-off of calendar year (CY) 2013, according to a report by ICICI Securities.
The narrow spread in CY13 was mainly on account of panic selling in response to deteriorating fundamentals, while the current situation is a function of improving fundamentals, it explained. Going ahead, it expects equity yields to turn attractive as volatility rises.