Hedging Is The New Normal As China Fears Grip Asset Managers

Stocks are rallying again after a minor pullback earlier this week, but it looks like fund managers are starting to anticipate a correction just around the corner. However, even though investors are starting to ramp up their hedging efforts, they aren't prepared for a total breakdown of the trade negotiations between the U.S. and China.

Hedging is the new normal

Bank of America Merrill Lynch's most recent Global Fund Manager Survey found that investors are generally "well-hedged but not positioned for a trade deal breakdown." The survey found a record-high level of investors buying portfolio hedges at 34%. The firm believes investors are "well-protected into correction."

However, Chief Investment Strategist Michael Hartnett and team...