Hedge fund investors don’t buy the idea that the U.S. economy is headed for a recession in the near term, according to data from Goldman Sachs
The bank studied the holdings of 835 hedge funds with $2.1 trillion of gross equity positions at the start of July, and found that overall these funds are overweight cyclical sectors, favoring stocks in Information technology, consumer discretionary, industrial and materials sectors relative to the Russell 3000 index, according to a research report published Tuesday evening.
Meanwhile hedge fund managers were underweight stocks in sectors typically seen as defensive , like real estate, consumer staples and utilities. They were, however, overweight the health care sector, also seen as defensive, as they took advantage of the market’s fears of Medicare-for-all and other legislation being debated in the Democratic presidential primary contest, according to Ben Snider, equity strategist at Goldman.
While funds have cut back on leverage since the beginning of July, as concerns over the yield curve and signs of rising trade policy tensions mounted, leverage remains elevated relative to the average level over the past five years.
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