Hedge Funds ‘Particularly Vulnerable’ To Market Unwind On ‘Crowding Risk’
Hedge funds are at risk of a particularly painful experience in the event the market suddenly rolls over in the face of mounting risks to the outlook and rising fears of a recession in the US.
That's one takeaway from the latest edition of Goldman's hedge fund trend monitor, which shows that the average fund holds 69% of its long portfolio in its top 10 positions.
The figure was 57% a decade and a half ago.
(Goldman)
Meanwhile, turnover continues to grind ever lower, with just over a quart
well, right, but the problem for everyone else when they “sell what they have” is that “what they have” is a big pile of exposure to the names that matter most to the broader market, so when they start dumping that, it’s a problem.
surprised Apple is not a top 10 holding.
Concentrated crowds chasing the same party punch?
It was the year (2017) of the “trillionaires,”
with the top ten firms capturing some 90 percent
of positive flows (Exhibit 16, next page). Starkly,
no firm that posted more than $30 billion in net
flows last year had less than $1 trillion in AUM (assets under mang)