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Hedge funds are cutting investment positions and staff as market pressure builds, The Wall Street Journal reported in a report listed by BizToc. Stock-picking funds unwound positions last month at their fastest pace in more than a decade, according to the Journal’s report.
The retrenchment began before Thursday’s steep stock-market drop. It points to strain inside professional money managers, where reducing risk can mean selling investments, closing teams or returning capital to clients.
Walleye cuts its stock-picking operation
In independently reported evidence of the pullback, Business Insider reported that $17 billion Walleye Capital was parting with its equity long-short leadership and a substantial portion of that business’s investment teams after losing 5.9% in October.
Business Insider said it reviewed a letter from chief executive and chief investment officer Will England. The firm described the changes as a simplification of its internal stock-picking business. Remaining internal teams would report to England, and Walleye planned to continue using outside stock managers.
Risk reduction reaches beyond trading desks
The changes affect how some professional investors staff and finance their strategies. Selling positions lowers a fund’s market exposure, while reducing teams changes who makes investment decisions and which strategies receive resources.
For households following the market, the performance of funds held in a 401(k) or IRA depends on their own investments. The institutional pullback adds another development to watch alongside company earnings, interest rates and the broad stock-market decline.
JBizNews Desk | Markets & Business
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