Hedge Funds And ETFs: Hedging Tools, Not Investment Vehicles?

Goldman Sachs' (NYSE:GS) Hedge Fund Trend Monitor, a quarterly round-up of 13-F filings and hedge fund trends, was published this week.

The report analyzes 833 Hedge Funds with $2.1 trillion of gross equity positions -- $1.5 trillion long and $684 billion short) based on 13-F filings as of August 15, 2015.

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Based on the analysis of hedge fund holdings, Goldman's research showed that hedge funds are more likely to use ETFs as hedging tools than as directional investment vehicles. The use of ETFs primarily as a hedging method runs contrary to the wider investment community. Indeed, ETFs are increasingly becoming the investment vehicle of choice for investors looking to make a low-cost, diversified directional bet on the market.

Nevertheless, Goldman's research shows...