(Valuewalk.com) In volatile markets, institutional investors position hedge fund exposure accordingly, but are not entirely satisfied in some alternative sectors. With the risk-on again, risk-off again relationship in the stock and commodity markets in full swing, trends in investor sentiment towards hedge fund strategies seem to correlate with market volatility. Hedge fund strategies were down -1.97% year to date, a J.P. Morgan Prime Brokerage Global Hedge Fund Trends report noted. With the stock market down -5.09% this might be viewed as a relative positive for hedge funds, but such a view becomes nuanced once the individual strategies are examined.
Recent U.S. economic data have revealed conflicting trends that “are not easily explainable,” the March 15 report noted. Unemployment continues to fall, a steady downtrend since 2008, while “cratering energy prices have resulted in a significant wealth transfer to consumers” amid low inflation and positive GDP trends over the past 24 months.
