Hedge funds significantly reversed their pro-growth positions in both US equities and corporate bonds during the first three months of the year, while upping their bets on gold, according to the latest Hedge fund Barometer from Unlimited
According to the asset manager and ETF sponsor’s proprietary technology, hedge fund managers came into the year with relatively low conviction and modest views but subsequently ramped up pro-growth positions including long the US dollar, and credit spread and equity bets in line with increased expectations of US growth from the new administration. The majority of those positions were reversed starting in February with the exception of extending bullish positions on gold.
“Hedge fund positioning shows some of the lowest conviction in the direction of asset prices that we have seen in decades,” said Bob Elliott, CEO and CIO of Unlimited. “Those positions were a dramatic transition from the beginning of the quarter when hedge funds were ramping up their bullish bets on the US economy. The prominence of policy volatility likely triggered managers’ reluctance to hold significant directional positions.”
According to Unlimited’s data, hedge funds returned an average 1.7% return over the quarter with emerging markets funds the top performers with a 6.3% gain. Event driven strategies were the worst performers meanwhile, with a -0.8% return.
