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Fear of further stock market falls sees hedge fund managers err on the side of caution

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Many US hedge fund manager seem to believe that further market declines are on the horizon and are adopting a cautious approach to stock trading as a result, according to a report by The Financial Times.

Many US hedge fund manager seem to believe that further market declines are on the horizon and are adopting a cautious approach to stock trading as a result, according to a report by The Financial Times.

The report cites a Morgan Stanley note sent to clients as revealing that by the middle of this month, the net exposure of US funds had fallen to the lowest level since 2010. Their European and Asian counterparts meanwhile, have cut their stock market wagers to the lowest level seen in the past 12 months.

The bearish positions have been adopted despite both the S&P 500 (-18%) and the Stoxx 600 (-15%) having already seen big falls so far this year.

Morgan Stanley’s data reveals that 2022 has been a difficult year so far for equity hedge funds with US long-short equity funds down 14.1% on average so far this year, and European funds down 8.3%.

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