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Alternative Market Briefing

Hedge fund investors bullish on equities as managers increase leverage and take a defensive stance against possible corrections

Tuesday, April 12, 2011

amb
Vincent Deluard
From Kirsten Bischoff, Opalesque New York:

Equities focused hedge funds received much of the allocation flow for February, as investors show renewed interest in stock markets and a higher tolerance for risk. Despite such global disruptions as the wars in the Middle East, the natural and nuclear disasters in Japan, and the continuing European debt crises, "Market participants nonetheless keep peppering equities with cash, and that might explain why market corrections have proven so shallow and brief," commented Vincent Deluard, Executive Vice President of Research at TrimTabs in a statement the firm released on Monday.

Large firms such as BlackRock have long been expressing bullish stances on US equities. In a quarterly commentary released this week, Bob Doll, Chief Equity Strategies, Fundamental Equities at the firm said that the concept of a "double dip" recession has vanished from the economic dialogue and has been replaced by a focus on inflation concerns. Doll says that even in light of the global turbulence, and rising commodity prices, his team sees the economy "turning the corner". He writes, "Helped in large party by a labor market that is finally showing meaningful signs of improvement, we do believe the US economy is in the midst of shifting into a self-sustaining expansion."

However, investors who moved to equity hedge fund investments in February were likely disappointed by March returns (or the lack ther......................

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