Investors positioned for the global recovery are in good company: it’s the most common bullish investment theme for hedge funds this summer, according to Lyxor Asset Management.
As interest in hedge funds rises again -- they saw the biggest jump in demand among asset classes examined in a Credit Suisse Group AG report last week -- Lyxor strategists including Jean-Baptiste Berthon set out current investment trends in a recent note.
Fund positions are “somewhat more neutral” ahead of the summer, they said, in particular to themes such as Chinese stability and a tightening Federal Reserve. However, different hedge fund types show a range of sensitivities to other market motifs such as recovering oil prices, U.S. reflation and increasing global inflation.
Here’s a summary of the positions of four types of hedge funds, according to Lyxor:
Macro Funds
Arbitraging Europe versus the U.S. using long equity, short bond positions Using short euro positions as a hedge, recently turned net long U.S. dollar Long energy and agricultural contracts.
CTA Funds (managed futures)
Remain structurally long equities in most regions, rebuilding bond exposures especially in Europe Short U.S. dollar, mainly against non-Group-of-10 currencies Short energy and agricultural contracts.
Long/Short Equity Funds
U.S. funds increasingly sector-balanced though long financials European funds reduced long financial positions, rotating toward communication, industrial stocks.