###POV. HEDGE FUND............>

GLOBAL MARKET/OPINION: ###POV. HEDGE FUND POSITIONS: SHORTING BONDS, REDUCING

EQUITIES, BUYING INFLATION & EMG DEBT

- Divining Hedge Fund positioning is difficult. We ran multivariate regressions

of Hedge Fund Research's Global Hedge Fund Index against various asset classes

to determine the size and direction of influence upon hedge fund returns. We

used daily data based upon changes and the relevant chart is below. 

- Changes have been big since the start of the year. Most notable in Q1 2018 is

that the correlation of the Hedge Fund Research (HFR) Index to an inflation

linked bond index is leaping; they are going long in a big way. Also in Q1, the

HFR index is very significantly (negatively) correlated to nominal bond indices.

This may indicate a short position, although correlations across asset classes

have changed in Q1, so some caution is warranted in taking strong conclusions.

- In Q4, the correlation with the S&P500 declined to modest levels but the

positive correlation with Emerging market bonds (EMBI+) rose significantly.

- We also looked at oil, gold and other commodities but there are only small

positions. See: https://tinyurl.com/yb635azz