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Hedge funds cut losses after failing to match gains in the wider
more cheaply held benchmark, MSCI's broadest world stock index,
which has risen more than 15% this year, said the note seen by
Reuters.
By contrast, stock-trading hedge funds have posted a positive
year-to-date performance of 5.8% and computer programme-led
funds are up 3.2%, according to the note.
Data last week showing U.S. inflation cooling further boosted
hopes of a soft landing for the world economy, powering shares
higher.
The failure of short bets on declining stock prices was one
reason cited for why hedge funds might be leaving trades, said
the note.
Hedge funds that pick trades, rather than letting computer
algorithms choose, began to struggle in late June and the
performance of their trades worsened in July, it said.
Hedge funds dropped short bets aimed at specific companies, like
those focused on energy, financials, and health care. However,
sectors such as food and beverage companies, those selling
household goods, offering information technology and working in
real estate, saw increased shorting activity, said the note.
While 60% of the trades that were abandoned were in U.S. stocks,
hedge funds also ditched bets on so called macro products,
related to how currencies, commodities and bonds react to the
broader economic environment.
(Reporting by Nell Mackenzie; Editing by David Holmes)
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