Trend hedge funds start holiday season by buying stocks, JPMorgan says

LONDON, Dec 5 – Trend-following hedge funds began December in a bullish mood, buying US, European, and Japan stocks, a prime brokerage note from JPMorgan said.

The S&P 500 and Japan’s blue-chip Nikkei both rallied almost 9% in November. European shares posted gains of over 6%.

Hedge funds overall finished November by posting a 2.3% positive performance result, said the bank in a note released on Sunday and seen by Reuters.

They did best with a 3.2% return in Europe, Middle East, and Africa, with a 2.1% return in North America, and were marginally positive in Asia with a 0.5% positive result, the note said.

Trend hedge funds, or CTAs (commodity trading advisers), trade systematically – meaning they try to catch market moves big enough to be a trend.

Systematic hedge funds recovered from losses earlier in the year in the October bond sell-off, with government bond yields from the United States to Germany hitting multi-year highs as concern about elevated interest rates and high debt levels took hold, hurting stocks in turn.

These hedge funds typically take hundreds of small bets across equities, bonds, commodities, and currencies.

Stocks of companies that distribute materials as well as firms that make discretionary products consumers like to buy but do not need, did well for these traders but they suffered losses speculating on financial stocks, including banks, said JPMorgan.

(Reporting by Nell Mackenzie; editing by Barbara Lewis)