Hedge Funds Buy Bond Proxies Despite Inflation Fears

US actively managed funds increased their exposures to bond proxy stocks despite inflation concerns and reduced exposure to commodity-oriented sectors last month according to Bank of America’s latest Active managers’ holdings update.

According to the update, active managers’ relative weight in materials fell to a five-month low of 0.86, “largely driven by the Chemicals industry.” Exposure to stocks in this sector fell to 0.96, the lowest relative weight “in our data history since 2008.”

Elsewhere, managers trimmed their exposure to Energy (after increasing for five months straight) and relative weightings in Real Estate, Telecom and Utilities all rose. Additions in Telecom and Utilities was most notable because following this buying, relative exposure is...