Will A Wave Of Hedge Fund Redemptions Cause A ‘Double Dip’ For Stocks?

Will a wave of hedge fund redemptions cause a "double dip" for an equity market coming off its worst quarter since 2008? JPMorgan doesn't think so. "The panicky selling of all types of funds by retail investors for two consecutive weeks is raising questions about potential redemptions by hedge funds", the bank's Nikolaos Panigirtzoglou says, in the course of reminding you that "during the Lehman crisis, unprecedented HF redemptions played a big role in propagating the equity and credit market

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5 thoughts on “Will A Wave Of Hedge Fund Redemptions Cause A ‘Double Dip’ For Stocks?”

Keep in mind that in 2007/2008 fund of funds were much bigger players in the space and many offered levered share classes. These share classes invested $2 in a hedge fund with $1 from investors. This exacerbated the redemption issues. This time around FoFs are tiny part of the market, many run “separate accounts” so the asset owners have more control control over redeeming…and there is less leverage!

therealheisenberg

March 31, 2020 at 9:39 pms Reply

Yeah, I thought I had that in there — I added it now. There’s a bit under the leverage chart.

The main concern to ponder in any if the current analysis by anyone, is to understand the difference between a 2 week reaction to a shock, then a 2 month reaction. It’s a but early for 2 years, but it’s easy to see where future treasury yields are headed …