Long-Only Managers Reduce Exposure in Energy, Boost Holdings in Consumer Discretionary
Long-only managers have reduced their exposure this week, with the largest outflows seen in the Energy sector, while boosting positions in Consumer Discretionary, according to Citi strategists. Meanwhile, hedge funds have been net sellers, trimming their exposure primarily in Industrials, Tech, and Energy, while adding to Health Care and Consumer Discretionary holdings.
The top three sectors this week were Tech, Consumer Discretionary, and Financials, while Energy, Health Care, and Real Estate made up the bottom three. Market indicators suggest that the “Growth Shock” regime remains the most closely correlated, followed by “Goldilocks.”
Recent 22-day relative returns align with patterns typically seen in the five most common regime clusters, which account for about 80% of observations. Sector performance over the past 22 days has reflected trends consistent with the “Growth Shock” environment. The “Goldilocks” correlation has also strengthened, nearing the highest correlation level.
Recent market activity has highlighted outperformance in Consumer Discretionary and significant underperformance in Energy, contributing to the dominant “Growth Shock” correlation. The “Goldilocks” regime, traditionally associated with favorable conditions for Tech, has maintained a strong correlation as the sector continues to outperform.
