Hedge Funds Stock Market 2010

Hedge Funds Stock Market

Hedge Funds Cautious on Trading in the Stock Market

Hedge funds made great gains by trading in stocks last year, but in 2010 managers are turning more cautious.  Some hedge fund managers worry that the economy could double-dip, sending stocks down to the lows the market reached in March of 2009.  With the potential for the economy to falter again, hedge fund managers are looking to different strategies such as emerging markets and commodities to keep the gains from 2009.
Large bets on rising stocks helped hedge funds make gains of nearly 19 percent last year, according to Credit Suisse/Tremont, but prime brokers say funds have grown more cautious in recent weeks in areas such as U.S. and European stocks.
"Exposure has been cut back. Some (funds) have made a lot of money last year," said one prime broker, asking not to be named. "Some are sceptical about the length and breadth of the recovery," the broker said.
Banks in particular could suffer as funding costs rise and margins are squeezed, after the financial sector was a top-performer in last year's rally.
Giving up last year's gains would make it harder for them to earn lucrative performance fees and could persuade clients to pull out their cash.  Read more here

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