Defensive Trades Misfire With Few Places to Hide on Wall Street

Just as bonds sell off while stocks get whipsawed, a slew of supposedly diversifying investment strategies are also failing to live up to their defensive billing.

Trend followers — a breed of quantitative fund who tout “crisis alpha,” or outperformance at times of market stress — have extended their worst losses in two years. A strategy that goes long steady stocks and short volatile ones is down on the week. Hedge funds, whose defensive pitch is right in their name, also appear to be struggling.