Hedge funds, which have long relished their reputations as aggressive traders, are now turning to safer strategies because, in these volatile market conditions, their investors are demanding it.

Managers who once relied on masses of borrowed money, or leverage, to pump up positions, are now playing it safe, ready to forego dozens of winning positions to avoid one blowup, Reuters reports.

Last year, for example, hedge funds reported a net market exposure of either long or short unhedged positions of only 33%, down from 68% in 1997. It is the lowest level in nearly a decade, new data from the Hennessee Hedge Fund Advisory Group shows.

Even more startling is the fact that only 7% o fall hedge fund assets are invested in global macro funds that make big bets on currencies, interest rates and bonds, like the one that earned billionaire George Soros billions – down from 75% in the 1990s.

As well, hedge funds have moved from solely an institutional client base to include a more conservative retail base.


The staff of Mutual Fund Market News ("MFMN") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MFMN, and have not prepared, sponsored, endorsed, or approved these summaries.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.