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Komfie Manalo, Opalesque Asia: Financial management company ML Capital said that because of the unstable economic environment, more fund managers have pooled funds into a lot of the same positions in an attempt to hedge against this volatility.
In its 3rd quarter Alternative UCITS Barometer, ML Capital said that positions that are seen as safe and favorable have included buying into tech giants, shorting emerging markets and shorting oil. However, this groupthink mentality has exacerbated the problem of crowded markets.
ML Capital CEO Cyril Delamare commented, "2016 has already seen a plethora of major events unfold before its eyes and with even more events lined up for the second half of the year, more surprises may be looming. The undecided implications of Brexit and the impending U.S. Federal election are the two notable events worrying investors, with predicted implications that will sizably affect the global economy."
He said that in this barometer, respondents were asked to identify what they would deem to be the greatest upcoming global risk. Repetitively identified was an overwhelming concern relating to changing central bank monetary policies, market volatility, over-crowded market positions and the overall health of the UK and U.S. economy.
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