The centrist candidate's victory is seen as a positive for European stability, something which supports the global reflation trend that has been building up since last summer. Economic data in Europe, Asia and the US has been improving, underpinning traditional risk assets, such as stocks, and high yield and emerging market bonds.

According to Pascal Gilbert, Head of Fixed Income, La Française, Bond markets are facing historically low yields, and this ongoing situation leaves, in theory, little room for a further appreciation in bond prices.

All strategies were up last week. Hedge funds captured the upside which was a function of the protections implemented ahead of the French vote. Special Situations outperformed, as their cyclical and turnaround positions surged. CTAs' strong long equity exposure offset losses in their short Euro and in their long Euro bonds.

Geopolitical forces suppressing global government bond yields have somewhat dissipated after the French first-round vote. We see Fed rate rise expectations returning as a bond market driver, justifying a cautious stance on sovereign debt.

Robert Haugen, who discovered the low-volatility anomaly in 1972, wrote numerous articles and books to try to popularise what he called the ‘hidden factor'. To some extent, it was only the advent of smart beta investment strategies that turned his dream into reality, as low volatility is central to the smart beta approach.