Are 'event driven' managers heading for another year of poor performance?

Following the unexpected poor performance of ‘event driven' strategies in 2014, Philippe Ferreira, head of research, managed account platform at Lyxor Asset Management, analyses what went wrong and they are doomed to repeat the same mistakes in 2015.

At the beginning of 2014, event driven (ED) strategies, which attempt to take advantage of corporate actions such as mergers and restructurings, were flashing green. In the US, merger and acquisition (M&A) volumes were back to pre-crisis levels on the back of strong corporate balance sheets, firmer economic indicators, and supportive financing conditions. Opportunities in the special situations space were broadening, as companies were restructuring their business to protect margins. Meanwhile, the threat of investor activism continued to provide incentives for CEOs and corporate bo...