Latest Hedge Fund Exposure Levels in Various Asset Classes ~ market folly

Thursday, October 21, 2010

Latest Hedge Fund Exposure Levels in Various Asset Classes

Societe Generale is out with their latest hedge fund watch and we see that overall, hedgies are very long the Swiss franc and have increased long positions in oil. Let's take a look at SocGen's round-up of hedge fund exposure to the various asset classes.

With regard to equities, Societe Generale finds that hedge funds as a whole are astonishingly 'neutral' on the markets. While a few funds have net shorts on the S&P, the main area hedgies are maintaining short positions are in small caps with the Russell 2000 (which investors typically play via the IWM exchange traded fund). In our particular coverage, we've seen many hedge funds favor high quality stocks essentially as placeholders in a portfolio given the somewhat tepid economic environment.

In bonds, they note that many funds had net short positions but they've been forced to square those positions as double-dip fears returned. SocGen notes that hedgies are somewhat long 10 year treasuries though as the second round of quantitative easing looms large. Back in May when the market started to panic, Broyhill's Affinity hedge fund outlined ten reasons to buy bonds.

Possibly the most notably change in terms of asset class exposure would be the uptick in commodity positions. As the dollar has weakened, many hedge funds believe commodities will benefit from quantitative easing round two. Specifically, these funds prefer positions in oil with a large net long position. At the Value Investing Congress recently, John Burbank of Passport Capital said that he is fond of hard assets/commodities.

Embedded below is Societe Generale's latest hedge fund watch report:

You can download a .pdf copy here.

If you're looking to see what specific equities hedge funds have been honing in on, be sure to stay up to date with our coverage of the latest SEC filings.

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