Still uncertain on where U.S. Stocks are headed, equity hedge funds are sitting out the market rally; despite taking big paper losses on bearish bets since June, according to industry executives and market data.
After slumping more than 20% during the first half on worries aggressive U.S. Federal Reserve rate hikes; aimed at taming inflation may cause a recession, the S&P has rebounded 17 % since mid-June on signs prices may be stabilizing.
However, hedge funds have remained on the sidelines of the rally to assess more economic indicators; before re-calibrating their portfolios, said prime broking executives and fund managers.
In a sign of their dim view of the market, hedge funds are sitting on a record $107 billion worth of net short positions – or negative market bets – in S&P 500 futures, according to BNP Paribas calculations based on regulatory data.