In a new survey, Citigroup finds that credit investors are upping their bets on everything, which means despite all the crises, risk is still on.
Obviously there’s something unnerving about this.
Analyst Hans Lorenzen writes:
What do the results say about the bigger picture? On the bright side, the survey reinforces the perception of investor credit risk appetite. It didn’t flake despite the adverse headlines. Yet we simply can’t get comfortable with how stretched positions seems to be from almost every angle – a large aggregate long, overweights in high-beta sectors, longs in high yield, longs in bank sub debt…
We understand the pressure fund managers are under to eke out performance each and every month but we’d still resist the temptation to chase beta here – at a point of high macro volatility, the warning signal from the survey seems clear.
Here’s a chart of institutional positions in real money:
And leveraged money:
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