Hedge funds are rapidly decreasing their investment in European stocks and returning to U.S. equities, according to Goldman Sachs Prime Services.
The notional net selling in Europe last week was the second largest in over 15 years of the desk’s records, with the previous week marking the highest level. This sell-off has been primarily driven by short sales, and to a lesser degree, long sales.
The bank’s prime book, which measures the relative weight of assets, shows near-minimal overweight levels for Europe over the past year.
The current level stands at +3.7% against the MSCI All Country World Index (ACWI), down from +4.9% at the beginning of the year.
Despite this reduction, the relative exposure to European stocks remains significantly above its five-year averages and is in the 75th percentile, according to the desk’s report.
