08/10/18

Hedge Fund And ETF Darling Stocks Crushed As Selloff Accelerates



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Hedge Fund And ETF Darling Stocks Crushed As Selloff Accelerates
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For the "smart money", the low volume stock ascent of 2017 and much of 2018 was a welcome opportunity to generate alpha by clustering into a handful of "hedge fund VIP" names - a group which was traditionally headed by FAANGS and other tech names which appeared immune to any economic news or market stress.

Not any more.

According to a new study from UBS, with the S&P 500 sliding 1% last largely due to a furious selloff on Thursday and Friday when interest rates spiked, stocks with the highest hedge fund or passive/ETF ownership posted sharp losses that were four times larger. And just as they posted stellar returns on the way up, they are getting punished on the way down, with equity returns inversely tied to their popularity with funds or, as Bloomberg simply puts it, "the more loved by hedge funds or ETFs, the bigger the drop."

The broader market selloff, which has been most acute among the widest-held stocks continued on ...

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