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U.S Hedge Fund Managers' Positioning Fuelled More By Broader Macro Trends Than U.S. Election

Lyxor Asset Management's Cross Asset Research division's latest weekly brief suggests that U.S. hedge fund managers are looking more at broader macro trends rather than the upcoming U.S. election to support their positioning. The firm says that trends including ample liquidity, the likelihood of additional fiscal stimulus (be it delayed), and the ongoing recovery are greater drivers of their exposures, based on actual manager feedback.

"Elevated uncertainty regarding the majority in Congress makes it speculative to position on U.S. elections. Hegde funds generally raised their exposures on signs that the September correction was ending. They are now shaving off some of their risks and neutralizing their most directional calls," says Lyxor's report.

At the strategy level, Lyxor says that Global Macro strategies are still seeing medium-term dollar weakness (with short-term support), are long U.S. breakeven and gold, and favour tactical calls on U.S. treasuries (currently short). EM-focused strategies remain long credit, especially on quasi-sovereign and are now long bonds – partially hedged with selective EM FX positions. U.S. Long/Short Equity strategies are cautiously positioning on a Democrat win, with a partial rotation out of some of their tech stocks towards the prime beneficiaries of a recovery and exposures to Asia Pacific. In Europe, Lyxor says that L/S Equity managers have not materially changed their exposures.

"They are also cautiously increasing exposures to value stocks at the expense of tech positions. Their main concern regarding U.S. elections, which may have less direct sector impact, is getting the market timing right," says the report.

 


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