Are Bond Hedge Fund Managers Better Than Equity Managers?

Are bond hedge fund managers better than equity managers? That’s the question JP Morgan’s global asset allocation research team headed by Nikolaos Panigirtzoglou asks in their March 31 Flows & Liquidity research note.

This question is actually an interesting topic of debate. Indeed, Panigirtzoglou and team note that there has been a large divergence in hedge fund styles over the past few years. Macro and equity focused long/short hedge funds have been largely responsible for the disappointing alpha generation of the hedge fund industry in previous years.

In fact, equity long/short hedge funds have produced a negative alpha in each of the previous five years compared to fixed income focused relative value and event-driven hedge funds, which have produced positive alpha...