It Sounds Like Hedge Funds Picked A Bad Time To Crank Up Their Stock Exposure

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Hedge fund returns have been pretty bad this year, and we have a feeling they might get worse, after reading about this from BofA:We estimate hedge funds increased their gross exposure to $1040bn in 1Q11 with $75bn explained by our increased universe of funds (206 new inclusions and 128 deletions). This compares to $930bn at the end of the 4Q10 or an 11% increase. Net exposure rose to 54%, compared to the 2007 peak of 59%.

The report goes on to note increased exposure to large caps, and cash holdings falling from 6.2% to 4.7%.

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