It's not that fund managers are shy about rotating out of Information Technology, Health Care and Consumer Discretionary, they just don't see a compelling case to go anywhere else yet. For years, there's been talk about the rebounding Energy sector, but neither the hedge fund universe nor the broader market is buying. After a half year or more of inching up their Energy holdings, according to 13-F filings, hedge funds have started trimming their exposure again. It's now back down to 2.43%.
Financial Services names account for 12.05% of hedge funds' exposure, a tad above the broader market's. Still, fund managers are backtracking on their holdings in that sector as well. So if funds are reducing their Energy stocks -- which is what you do ahead of a recession -- and they're also reducing their Financials -- which is what you do once an expansion is well underway -- where on the business cycle are we?