Stock Pickers Throw In The Towel: “Active Manager Beta Exposure Is The Highest Ever”

Yesterday we quoted from a surprising report by Credit Suisse, according to which after surveying numerous clients, the bank had come across “almost no one who seems to have outperformed or made decent returns this year.” While not quite as extreme, the latest HSBC performance report confirms that the broader market is outperforming the vast majority of hedge funds in 2016.
But more surprising was Credit Suisse’s admission that “we have never had so many client meetings starting with statements such as ‘we are totally lost‘.” The main cited reason for the confusion is that “clients are close to being as bearish on equities as we can remember. Clients do not find equity valuations attractive enough to compensate for the macro, political, earnings and business model risks.”
And yet, with everyone “bearish” the market continues to levitate higher to record highs (on ever less volume) most recently today, when it touched a new all time high shortly after the US reported the worst annual growth in GDP since 2010, further confusing traders who as we said yesterday, in a scramble for performance have succumbed to the oldest error in the book: performance paralysis, better known as a herd-chasing panic.

This post was published at Zero Hedge on Jul 29, 2016.