How Hedge Funds Have Invested $6 Trillion for Q2

Banking, finance, and taxes

Published: May 27, 2018 8:23 am

Last Updated: January 11, 2020 11:06 pm

The 50 largest U.S. hedge funds manage more than $6 trillion in assets for thousands of investors who are willing to pay their hefty fees in exchange for better than average returns. That’s why smaller investors pay attention to the so-called “smart money.”

For the first quarter of 2018, hedge funds managed a return of 0.35% on the Hedge Fund Research Fund Weighted Composite (FWC) index. Not much, but better than the Dow (down about 2% in the quarter ) and the S&P 500 (down slightly for the first loss in nine quarters). Only the Nasdaq Composite (up a bit more than 2%) posted a gain for the quarter.

Volatility soared in March with reports of tariffs and trade wars offered a challenging environment for hedge funds and small investors. Kenneth J. Heinz of Hedge Fund Research told HedgeWeek:

As most equity markets declined, hedge funds quickly adapted to low and non-correlated exposures across asset classes, and to capital protection and preservation positions, en route to producing a first quarter gain. It is likely that these trends will not only continue, but accelerate into mid-year, driving uncorrelated gains and industry capital growth.

So what did the hedgies shift into and out of? Last week, researchers at WalletHub reported their findings following an analysis of the filings of more than 400 top hedge funds and identifying the funds biggest holdings, new positions, recent exits, and other details.

Based on that research, there are the 10 stocks most popular with hedge fund managers at the end of the first quarter of 2018.

Microsoft Corp.
Amazon.com Inc.
Apple Inc.
Facebook Inc.
Alphabet Inc.
JPMorgan Chase & Co.
Wells Fargo & Co.
UnitedHealth Group Inc.
Bank of America Corp.
Visa Inc.

WalletHub’s researchers also reported on the largest changes to hedge funds managed by billionaires like Warren Buffett, George Soros, and Carl Icahn. Visit the WalletHub website to learn what stocks these top funds bought and sold and other details and expert commentary.

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