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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Lazard Enhanced Opportunities returned 2.82% in Q2 2026, underperforming as equity hedges detracted from strong market gains. AI infrastructure convertibles from Nebius and Akamai drove positive performance through volatility-driven basis expansion."
The Lazard Enhanced Opportunities Portfolio returned 2.82% net in Q2 2026, underperforming its benchmark by 258 basis points as portfolio-level equity hedges detracted amid strong market performance. The fund's convertible arbitrage strategy benefited from AI infrastructure names, with Nebius Group and Akamai Technologies convertibles delivering strong gains as increasing stock volatility led to basis expansion. The convertible market saw robust activity with $83 billion in new issuance, nearly double the prior year's second quarter and on pace for a record year. Interest rates rose during the period as new Fed Chairman Kevin Warsh signaled a hawkish stance on inflation, partially offsetting convertible bond valuation gains. Technology stocks led market gains before rotating lower in June, with the Magnificent 7 declining 9% for the month. Looking ahead, the team expects earnings season to drive increased single-stock volatility, creating additional gamma trading opportunities, while record convertible issuance should continue benefiting the asset class.
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