The relentless rally that has the S&P 500 Index hovering near all-time highs still hasn’t convinced Wall Street’s smart money to give up on their bearish views.
“Managers are still pretty cautious as a lot of the underlying risks still haven’t gone away,” said Jonathan Caplis, chief executive officer of hedge-fund research firm PivotalPath, citing macroeconomic uncertainty.
“Hedge funds didn’t experience the drawdown in the same way the market did as they levered down before it,” said Caplis. “They didn’t have that pain so they’re not forced to participate in the rally.”
Equity Hedge funds’ performance this year has been less than stellar. They’ve returned 7.8% through the end of June, although still in the 72nd percentile of all six-month periods going back to January 2000, as measured by PivotalPath Equity Diversified Index.