Volatile conditions hit UK long/short funds in market's middle ground
Volatility hurt UK equity hedge funds in April and May, and some have reduced their exposure to mid-caps given this sector's lower liquidity
Equity fund managers have traditionally sought the mid-cap sweet spot of markets as under-researched, more likely to be mis-valued and hence ripe with profitable opportunities.
However, some UK long/short hedge fund managers are tempering their enthusiasm and allocations to this middle ground on concerns about liquidity and some crowding in the market stratum by hedge and other managers.
David Yarrow, principal fund manager at Clareville Capital Partners LP, is one such manager in London. He says
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