Don't Kid Yourselves. Robot Sellers Haven't Vanished From Stocks
- Automated funds gaining influence on S&P 500 as calm remains
- Risk-parity funds have added to equity holdings since March
This article is for subscribers only.
While holding fewer bullets than in August, a gun is still pointing at the head of U.S. investors in the form of automated funds that sell when turbulence increases.
So writes UBS Securities LLC’s Rebecca Cheong, who says the relative calm in stocks since February has spurred managers of strategies such as risk parity quietly to reload. Their involvement in stocks -- or, phrased another way, their ability to amplify selloffs should markets start to crack -- is about 18 percentage points below its level nine months ago, but it hasn’t gone away, according to Cheong.