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U.S. hedge funds have become net sellers of stocks associated with the so called “Trump trade,” according to data released by Morgan Stanley (MS).
Hedge funds based in America became net sellers of global equities over the past week, selling North American stocks as they assess what a second Donald Trump presidency will mean for the U.S. economy and markets.
Professional money managers had previously piled into stocks that might benefit from a second Trump presidency in the wake of the U.S. election on Nov. 5.
Hedge funds bought U.S. financial and industrial stocks with a view that those securities would get a boost from a deregulatory push and Trump’s protectionist trade policies.
But now, hedge funds appear to be abandoning that trade and have become net sellers of U.S. equities, notably financial, industrial, and defense stocks, said investment bank Morgan Stanley.
Hedge funds also were net sellers of discretionary stocks, disposing of shares in hotel and restaurants while also selling healthcare stocks.
Some analysts say the selling by hedge funds could be the result of profit taking after big gains were made during the post-election rally in U.S. markets.
However, other analysts say hedge funds appear to be reassessing their portfolios as the reality of what a second Trump administration will mean for markets and the U.S. economy.
Morgan Stanley’s stock has risen 40% this year to trade at $132.24 U.S. per share.
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