Hedge Funds Lose Market Conviction, Except for Shorting US Stocks

Hedge fund managers who’ve been holding fire as tariff headlines whipsawed markets are still reluctant to place any major bets, with one big exception: shorting US stocks.

So-called market conviction, a gauge of hedge funds’ confidence in pursuing a particular investment strategy, is recovering somewhat after swooning to near its lowest in decades, according to data provided by Bob Elliott, a former top executive at Bridgewater Associates Ltd. Positioning across major asset classes — including currencies, bonds and commodities — remains weak after having fallen at the end of March into the bottom 10th percentile relative to levels since 2000.