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LIVE MARKETS-Why have hedge funds outperformed fundamental managers?

* European shares edge up at the open

* UK parliament to vote on no-deal Brexit option

* Adidas, Inditex fall after updates

March 13 - Welcome to the home for real-time coverage of European equity markets brought to

you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to

share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net

WHY HAVE HEDGE FUNDS OUTPERFORMED FUNDAMENTAL MANAGERS? (1045 GMT)

Bernstein strategists have taken a look at fund performance year-to-date and one interesting

finding is that global hedge funds are doing rather well and are outperforming both U.S. and

European fundamental managers.

Why is that? Bernstein believes it's mostly due to significant differences in factor

positioning.

"U.S. fundamental funds are underweight Value and Quality, with a large overweight Low

Volatility. European funds are also underweight Value and Quality and overweight Low Volatility.

Global equity hedge funds are long Value, short Low Volatility, Momentum," they note.

"The difference in exposure to Low Volatility is likely a large part of what has driven the

outperformance of Hedge Funds and underperformance of fundamental funds year to date, as this

factor has underperformed," they add.

It's interesting that Low Vol, a factor meant to outperform in volatile times, has failed to

perform so far this year. Fundamental funds' weighting to Low Vol is a reflection of the extent

to which the rally year-to-date, largely driven by cyclicals, has taken the market by surprise.

(Danilo Masoni)

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OPENING SNAPSHOT: BREXIT KEEPS EUROPE FLAT (0906 GMT)

European shares are broadly steady in opening deals today with Brexit uncertainty keeping a

cap on gains ahead of another session in the British parliament, which will vote on whether to

leave the European Union in 16 days without an agreement.


Meanwhile, JPMorgan has reduced the probability of the UK leaving the EU on the terms of

Theresa May's defeated deal to 35 percent from 45 percent but said it was still the most likely

option.

After opening down slightly the STOXX 600 has managed to recover a bit to gain 0.2

percent, as you see in the snapshot.

And here's your new Brexit roadmap:

Turning to the corporate front, earnings are driving the biggest moves with Verbund

, Adidas and Inditex all down more than 4 percent to the bottom of

the STOXX 600 following poorly received updates.

Top gainer is asset manager Standard Life, up 4 percent, after its results and

naming Keith Skeoc as sole CEO.

(Danilo Masoni)

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ON THE RADAR: NO NEWS GAME CHANGER (0756 GMT)

European bourses are set to open in the red and there doesn’t appear to be any game changer

in corporate or macro news either.

Wirecard is expected to fall 5 percent at the open fall after it suspended an accounting

employee in Singapore amid allegations of fraud and creative accounting.

Some fresh data from the retail/consumer front which might weigh on shares. Adidas (seen

down up to 4 percent) said it expects supply chain issues to hit its sales growth in the first

half of the year, particularly in North America, while it hopes to return to growth in Europe.

Cash-rich Zara owner Inditex published annual earnings slightly below analyst expectations

and is also expected to retreat at the open.

In utilities, German energy firm E.ON forecast largely stable operating earnings for 2019,

while Innogy forecast a 13-percent drop in operating profit this year, as competition in the

British retail market remains tough following a failed attempt to merge its local unit with that

of SSE.

One story that isn’t going away is the Boeing 737 MAX 8 jets with currently two-thirds of

the fleet grounded according to Reuters calculations. Norwegian Air said it would seek

compensation from Boeing.

(Julien Ponthus)

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FUTURES POINT TO A STUMBLE AT THE OPEN (0718 GMT)

Europe is set to go lower at the open with futures currently retreating between 0.3 percent

and 0.5 percent.

There's a bit of corporate news with notably Inditex and Innogy but nothing that strikes as

being big enough to change the mood and help markets snap out of their current risk-off spirits.

(Julien Ponthus)

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NO REASON FOR EUROPE TO RISE AT THE OPEN (0630 GMT)

European shares are expected to open in the red this morning as the risk-off mood which

weighed on Asian shares spreads out to our time zone.

There's little reason for bourses to rise at the moment and morale is still low after

Theresa May suffered another humiliating defeat on Brexit in Parliament last night.

Financial spreadbetters expect London's FTSE to open 18 points lower, Frankfurt's DAX 41

points down and Paris' CAC to retreat 21 points.

Below the Daily Express asks a question which we believe also applies to the rest of Europe

and perhaps the world:

(Julien Ponthus)

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