After being bearish on theU.S. stock market, many hedge fund
managers have had a change of heart and turned bullish on domestic
stocks in a reversal that could underpin market action in the near
term, the latest BarclayHedge/TrimTabs Investment research survey
About 43 percent of hedge fund managers are now bullish on the
S&P 500, a sharp increase from only 27 percent the previous
month, and the highest number of bullish managers since December,
the monthly survey showed. By contrast, bearish sentiment has
plummeted to its lowest readings since January.
âThis reversal is striking,â Sol Waksman, head of
BarclayHedge, said in a press release about the report. âHedge
fund managers were meaningfully bullish on domestic stocks in only
one month in the first half of the year.â
âOur research shows that hedge fund sentiment is a decent
leading indicator, so the shift could help support stock prices in
the near term,â Waksman said.
Investors, indeed, poured more than $4.3 billion into U.S.
equity ETFs in July, making the asset class the leading gainer in
the month as it snatched nearly a third of all ETF asset inflows,
according to data compiled by IndexUniverse.
State Street Globalâs SPDR S&P 500 ETF (NYSEArca:SPY), the
worldâs biggest ETF at $93.3 billion in assets, was, in fact, the
most popular fund in July, hauling in enough assets to offset
market declines. More than two-thirds of managers surveyed said
they found the valuation of the S&P 500 to be fair, if not
cheap, according to the TrimTabs report.
Sour On Bonds, Souring On Gold
Hedge fund managers meanwhile remain âvery sourâ on
long-dated Treasurys, the report said. Bullish sentiment on the
10-year note sank to its smallest reading in more than seven
âHedge fund managers have been net bearish on the long end all
year, even though the 10-year yield plunged to 2.88 percent in June
from 3.75 percent in February,â Minyi Chen, vice president of
quantitative research at TrimTabs, said in the report.
âMeanwhile, it does not surprise us that managers remain inclined
to lever up, because performance has been lacking.â
Managers are not as keen on the gold run, either. Nearly 40
percent of them said gold is perhaps the most overbought asset in
the market today, compared with oil, equities, U.S. Treasurys and
European stocks, the report said.
Still, investors continued to flock to the precious metal, with
funds like the SPDR Gold Shares (NYSEArca:GLD) and the iShares Gold
Trust (NYSEArca:IAU) being among the most popular in July. GLD
raked in $2.85 billion in the last month, while IAU brought in $631
âThat result surprises us,â Chen said. âThe precious
metals flow data we track daily does not scream bubble, and
speculative traders had much larger net long positions on gold
futures in August and December of last year.â
âMeanwhile,Europe equity ETFs boast a huge year-to-date inflow
of 23.6 percent of assets,â Chen added. âThatâs a lot of
money chasing an asset that posted a negative return of 5.1 percent
in the past three months.â
International equity ranked second in ETF net flows in July,
capturing more than $2.8 billion of new investment capital,
according to the data compiled by Â IndexUniverse.
The two firms, which surveyed 82 managers, track hedge fund
flows monthly. BarclayHedge is a closely held Iowa-based research
and portfolio management company focused on institutional clients,
while TrimTabs is an investment research company.
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