Capital Commentary is a quarterly view of the equities, fixed income and hedge fund markets from our Family Management specialists: Jonathan Horn, Daniel Erben, and Jason Nardis.
The Fed hiked rates at its March meeting, but the pace of future rate increases will be dependent on economic data and fiscal policy going forward. The FOMC voted to raise the target range of the federal funds rate to between .75%and 1.00% on March 15th.
Unlike 2016, hedge funds posted positive results during the first quarter of 2017. The alternatives sector experienced strong performance as the Federal Reserve increased its benchmark interest rate and the Trump trade faded amid growing concerns that the new administration would not be able to pass business-friendly legislation.
With the markets focused on the new President’s economic agenda in 2017, U.S. equities continued their climb. But as key policy promises of the new administration had yet to be implemented, the equity markets were trading on hope that Trump and his Republican majority would implement their election winning assurances of tax reform,massive infrastructure spending and the repeal and replacement of the Affordable Care Act.
Hedge Funds advanced in the final quarter of the year as the Trump victory increased investors’ expectations for infrastructure spending and reduced financial regulation.