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AI market round up: Shorting still okay, leverage up

Hennessee’s 13th annual hedge fund manager survey reveals that managers are still shorting despite concerns that uptrending markets were shifting funds to long-only strategies. Hedge funds surveyed had a net exposure of +47%. Average gross exposure was 171%, the highest since the survey in 1995, indicating that more leverage is being used to generate returns. Charles Gradante of the Hennessee Group commented: "Despite the increase in assets and leverage throughout the industry, net exposures continue to remain fairly constant, indicating funds are finding a reasonable amount of short positions. However, we are seeing increased use of derivatives such as credit default swaps and ETFs, which we feel will become more common as the ability to borrow stocks and bonds declines.

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