42% of Hedge Funds Turn Bearish on Stocks
September 12, 2011
Forty-two percent of hedge fund managers became bearish on stocks in August, up markedly from 27% who were pessimistic in July, according to a survey by BarclayHedge and TrimTabs Investment Research. This is the largest percentage of bearish hedge fund managers in a year.
Conversely, 27% are bullish on stocks, down from 43% the month before.
"This reversal to extremely bearish from markedly bullish is striking," said Sol Waksman, founder and president of BarclayHedge. "Especially sour moods probably owe in part to the recent crash in the S&P 500, which plunged 16.8% between July 22 and Aug. 8. Additionally, on Aug. 9, the Fed announced it feels downside risks to the economic outlook have increased so much that it plans to keep the policy rate at exceptionally low levels until the middle of 2013."
Fifty-six percent think the economy is already back in a recession or about to slip into one. Only 3% think the economy will turn net positive.
"This pessimistic view squares with recent downward GDP revisions from the Fed, the IMF and many Street forecasters," said Leon Mirochnik, TrimTabs associate portfolio manager. "Additionally, hedge fund managers tell us they are most upbeat on defensive sectors, such as utilities and consumer staples, and least upbeat on risk sectors, such as consumer discretionary and industrials."
Gen Y Views Fin'l Crisis As The Great Depression
The dot-com crash and the Great Recession have taken a serious and lasting toll on the risk appetite of Generation Y, according to the latest MFS Investing Sentiment Survey. This generation, between the ages of 18 and 30, are "investing more like their parents and grandparents, many of whom grew up in the shadows of the Great Depression," said William Finnegan, senior managing director of U.S. retail marketing for MFS.
Forty percent of the Gen Y's who MFS surveyed agreed with the statement, "I will never feel comfortable investing in the stock market." Fifty-nine percent they consider themselves to be savers, rather than investors, 54% said they are overwhelmed by all of the investment choices available to them, and 47% are procrastinating investment decisions.
Although 34% said their primary investment goal is growing assets, 30% of Gen Y said it was to protect their principal and not lose any money. Fifty-four percent agreed with the statement, "I'm more concerned than ever about being able to retire when I thought" and 44% have "lowered their expectations about the quality of their life in retirement."
PIMCO to Get Further Autonomy in Allianz Reorg
Allianz is rolling up its asset management division and PIMCO units into a new structure to be called Allianz Asset Management, effective Jan. 1.
The new unit will enable the Allianz and PIMCO brands to stand more distinctly-and formidably-on their own, parent Allianz said. While Bill Gross and Mohamed El-Erian will continue to run PIMCO as co-CIOs, with El-Erian also CEO, Allianz will be led by Elizabeth Corley as CEO and Andreas Utermann as CIO.