Key Takeaways
- • Global macro conditions remained constructive in February 2026, with US activity resilient amid continued AI-related investment and euro area manufacturing returning to expansion (composite PMI 51.9, manufacturing 50.8).
- • Risk assets advanced broadly in February with leadership rotating away from crowded US mega-cap growth into European and Asian cyclicals, value-oriented segments, and non-US markets; industrials and energy exposures remained well-supported.
- • Fixed income benefited from yield compression of 20-30 basis points across 5-year and 10-year maturities in the US and Europe, while investment-grade and high-yield credit spreads widened modestly but remained resilient.
- • Long-Short Equity strategies outperformed in February as directional bets capitalized on negative spreads between most-owned longs and shorts, particularly in European markets.
- • The HFRX Global Hedge Fund EUR Index advanced +0.30% in February, demonstrating alternative assets' ability to generate returns amid policy uncertainty and uneven regional growth dynamics.
Summary
Global macroeconomic conditions in February 2026 supported alternative asset performance despite mounting policy uncertainty and regional growth disparities. US economic activity remained solid, driven by robust private demand and sustained AI-related capital expenditure, while the eurozone showed modest improvement with manufacturing emerging from prolonged contraction. German order momentum and expanding composite PMIs signaled potential bottoming in industrial activity, though geopolitical tensions—specifically the war in Iran—threatened disruption to energy supply chains and posed downside risks to global economic growth.
Risk assets generally advanced during the month, but the composition of returns shifted materially. Equity market leadership moved beyond concentrated US mega-cap growth positions, with stronger performance in Europe and Asia reflecting a broader rotation into cyclical and value-oriented segments. European industrials and energy-linked exposures benefited most from this repricing, while growth-heavy software and technology segments underperformed. This dispersion in equity returns created favorable conditions for long-short strategies, as the negative spread between most-owned longs and shorts—particularly pronounced in European markets—allowed directional strategies to outperform market-neutral and lower net exposure approaches.
Fixed income markets provided additional tailwinds for alternative managers through yield compression. Five-year and 10-year maturities eased 20-30 basis points in both US and European markets, supporting fixed income valuations. Credit spreads widened slightly for both investment-grade and high-yield segments but remained within resilient ranges, indicating contained credit stress. Commodities presented a mixed backdrop, with gold remaining crowded from a positioning perspective while oil and gas had not yet emerged as dominant macro shocks by February's end.
The HFRX Global Hedge Fund EUR Index returned +0.30% in February, reflecting alternative strategies' capacity to navigate policy uncertainty and uneven growth conditions. Long-short equity strategies, in particular, benefited from market breadth improvement and tactical rotation opportunities, positioning alternative assets as sources of relative value guidance in markets characterized by AI-driven growth concentration and structural economic rebalancing across regions.
Risk assets generally advanced during the month, but the composition of returns shifted materially. Equity market leadership moved beyond concentrated US mega-cap growth positions, with stronger performance in Europe and Asia reflecting a broader rotation into cyclical and value-oriented segments. European industrials and energy-linked exposures benefited most from this repricing, while growth-heavy software and technology segments underperformed. This dispersion in equity returns created favorable conditions for long-short strategies, as the negative spread between most-owned longs and shorts—particularly pronounced in European markets—allowed directional strategies to outperform market-neutral and lower net exposure approaches.
Fixed income markets provided additional tailwinds for alternative managers through yield compression. Five-year and 10-year maturities eased 20-30 basis points in both US and European markets, supporting fixed income valuations. Credit spreads widened slightly for both investment-grade and high-yield segments but remained within resilient ranges, indicating contained credit stress. Commodities presented a mixed backdrop, with gold remaining crowded from a positioning perspective while oil and gas had not yet emerged as dominant macro shocks by February's end.
The HFRX Global Hedge Fund EUR Index returned +0.30% in February, reflecting alternative strategies' capacity to navigate policy uncertainty and uneven growth conditions. Long-short equity strategies, in particular, benefited from market breadth improvement and tactical rotation opportunities, positioning alternative assets as sources of relative value guidance in markets characterized by AI-driven growth concentration and structural economic rebalancing across regions.
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