Mario Draghi's communication skills have proved exceptionally effective. Since the famous “whatever it takes” in 2012, yields for peripheral sovereign debts have converged sharply towards levels for German debt. Yields for BTPs, Bonos and IGBs sit at record lows.

Etienne Vincent, head of THEAM's global quantitative management, explains how the four main recurring sources of outperformance in the equity markets, extensively developed in the “smart beta” concept, can be likened to the four cardinal virtues described by Plato, the Greek philosopher.

The strong demand in the primary market confirms what is already well known: whatever the inflation expectations, there is significant structural demand, notably from “buy and hold” investors such as pension funds, for bonds indexed to inflation.

The Lyxor Hedge Fund Index was up +1.9% in February, bringing year to date performance to +1.45%. 11 Lyxor Strategy Indices out of 12 ended the month in positive territory, led by the Lyxor Special Situations Index (+3.48%), the Lyxor CTA Long Term Index (+3.4%) and the Lyxor L/S Equity Long Bias Index (+2.7%).

One may reasonably argue that the recent flows into the Low Volatility strategies might affect their future performance because of the flow pressure on the prices of the companies that generally are selected by this investment approach. More recently, some market participants have even referred to Low Volatility investing as “a bubble”.