Lyxor Asset Management, a wholly owned subsidiary of Societe Generale, has said, in its investment barometer index, that hedge funds are positioned for growth, despite political risk.

Lyxor's Alternative Investment Barometer for the month of October, entitled: "Hedge Funds Positioned for Upside Despite Short-Term Political Risks", revealed that ten out of thirteen Lyxor strategy indices ended the month of September in positive territory, led by the L/S Equity - Variable Bias (2.28 per cent), the L/S Equity - Long Bias (+1.99 per cent) and the Event Driven - Special Situations Index (+1.95 per cent).

The Lyxor Hedge Fund Index posted a positive performance of 1.13 per cent in September (+3.17 per cent year-to-date).

Hedge funds generated solid performance in September as assets rallied after reduced Syria tensions and a dovish US Federal Reserve, the firm said in a statement.

The Lyxor Hedge Fund Index was up 1.13 per cent, while the HFRX Index was up 1.0 per cent. The average equity beta of funds increased to 31 per cent from 24 per cent over the course of the month as managers added to risk exposure. Funds have generally increased their risk exposure through September with a positive view of risk assets and to benefit from any year-end rally.

Meanwhile, equity strategies generally did well as the S&P 500 was up close to 4 per cent. L/S Equity Long Bias was up 1.99 per cent, approximately as expected by the beta exposure. However, Long Bias managers reduced risk with net exposure down 13 per cent to 66 per cent. 

Gross exposure remained steady at 135 per cent as reduced long positions were offset by higher short positions. L/S Equity Variable Bias gained 2.28 per cent and was the best performing equity sub-strategy. Variable funds correctly maintained high beta exposure to the market at 0.55 heading into September and have maintained this beta throughout the month. L/S Equity Market Neutral strategy was down by -1.04 per cent in September despite having positive beta exposure to the market, the firm said.