BANK OF AMERICA: Hedge funds are more defensively positioned than ever as they brace for coronavirus fallout
Hedge funds posted an"extreme rotation" out of cyclical stocks after the end of the first quarter as managers brace for a potential market downturn,Such funds are now the most defensively positioned they've been since the bank began tracking the data in 2011.
Long-only funds made similar moves to pad against a downturn, dumping nearly 80 million of energy company shares in the second quarter so far following oil's late April plunge.As stock indexes rally and investor sentiments improve, hedge funds are battening down the hatches for continued coronavirus turmoil.Bank of America
said in a Wednesday note. Managers are now the most defensively positioned they've been since the bank began tracking the data in 2011. Hedge funds' concentrations in the health care and utility sectors now sit two standard deviations from their long-term average, the team led by Savita Subramanian wrote. Long-only cyclical versus defensive exposure sank to its lowest point in 12 months, and positions in energy, discretionary, and materials companies neared record lows.
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