US funds piled on index hedges ahead of stock selloff

Counterparty Radar: Filings show managers adding more than $5.5 billion of puts in Q3, setting new high

Wall Street

US mutual funds were positioning for an equity market selloff in the third quarter of last year, as climbing inflation increased pressure on the Federal Reserve to taper its bond-buying programme and hike rates.

Managers added over $5.5 billion of bought index puts – setting a new high-water mark – according to an analysis of the sector’s regulatory filings. By the end of the third quarter, the total notional value of bought puts stood at $64.7 billion, up from the $59.2 billion book reported

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