Hedge funds turn bullish as their equity exposure is the largest since April 2023 By

Hedge funds are xm foreign exchange official websiteturning bullish, with their net long exposure surging to 228% at the end of April 2024, up from 168% in the month prior.

According to Jefferies analysts, this marks the highest long exposure since April 2023.

“To accomplish this, they also raised their net short position to -128% vs. -0.68% one month prior,” analysts noted.

Jefferies also highlighted a marked increase in exposure to secular growth sectors, particularly technology and healthcare.

"Hedge funds sharply increased their exposure to Health Care with the weight at 21.1% from 15.1% one month ago. Tech's weight was bumped up to 29.7% from 27.1%," the report noted.

Moreover, hedge funds have reduced their positions in bond proxies, sectors traditionally seen as safer but with lower growth potential, with Staples going down from 2.9% to net short -1.4%. Utilities fell from 1.4% to -0.14% and Real Estate slid to -0.5% from -0.3%.

The S&P 500 continued its upward trajectory in June, but not all tracked portfolios matched its performance, Jefferies said.

The Most Popular Longs and Uber Crowded portfolios outperformed the S&P 500, with year-to-date gains of 24.7% and 28.9%, respectively. In contrast, portfolios focusing on short positions underperformed; the Popular Shorts portfolio gained just 1.8% YTD, while stocks transitioning from Long to Short rose by 0.8%. Also, the Short to Long portfolio posted weak results in June, showing a modest 0.5% increase for the year so far, the investment bank noted.

It also observed a noteworthy shift in the weight of their "Sweet 16" portfolio, which tracks key high-growth stocks.

"Despite getting 'Growthier,' investors lowered the Sweet 16 weight to 39.5% from 41.7% at the end of April," analysts noted. “However, our Sweet 16 represented 33.7% of the S&P 500; thus, these investors are OW the group by 5.8%.”

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