Investing.com — Long-only managers reduced their exposure this week, with the largest outflows observed in and Energy, while boosting positions in and Consumer Discretionary, according to Citi strategists.
Hedge funds were also net sellers, trimming exposure primarily in Industrials, Tech, and Energy. At the same time, they added to Health Care and Consumer Discretionary holdings.
“The top three sectors this week were Tech, Consumer Discretionary, and Financials, while Energy, Health Care, and Real Estate made up the bottom three,” strategists led by Alex Saunders highlighted.
Market indicators suggest that the “Growth Shock” regime remains the most closely correlated, followed by “Goldilocks.”
Citi notes that recent 22-day relative returns align with patterns typically seen in the five most common regime clusters, which account for about 80% of observations. Sector performance over the past 22 days has reflected trends consistent with the “Growth Shock” environment.
The “Goldilocks” correlation has also strengthened, nearing the highest correlation level. Recent market activity has highlighted outperformance in Consumer Discretionary and significant underperformance in Energy. This divergence has contributed to the dominant “Growth Shock” correlation.
The “Goldilocks” regime, traditionally associated with favorable conditions for Tech, has maintained a strong correlation as the sector continues to outperform.
