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Why Hedge Funds Have a Dull Outlook on the Market in 2H17

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Why Hedge Funds Have a Dull Outlook on the Market in 2H17 PART 1 OF 10

Why Hedge Funds Have a Dull Outlook on the Market in 2H17

A survey released on Thursday

According to a report published on CNBC on Friday, August 25, 2017, the hedge fund industry has a dim outlook on the market (QQQ) (SPY) for 2H17. According to an industry survey released on August 24, many hedge fund managers have a dull outlook for the market (IWM).

Why Hedge Funds Have a Dull Outlook on the Market in 2H17

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Markets in 1H17

In the first half of 2017, the market showed strong returns. The S&P 500 (SPX-INDEX), the Dow Jones Industrial Average (DIA), and the Nasdaq Composite Index (COMP-INDEX) rose 7.6%, 8%, and 13.4%, respectively, between January 3, 2017, and June 30, 2017.

In 2H17

Markets have been showing some nervousness since the beginning of 2H17. Recently, we saw some pullback from the S&P 500 Index. Many fund managers have said that they are expecting fund inflows to the market in the second half to be flat or negative.

In the first half of 2017, President Donald Trump’s inauguration and his proposed reforms mainly drove the market movement. Now, the delay in policy reform is affecting the market movement. Investors became doubtful whether a tax restructuring bill would be passed.

Recently, some of Trump’s appointed advisory committee members have left their positions. Billionaire investor Carl Icahn stepped down from his post as special advisor to the president. All these factors are affecting the market movement. Many analysts believe that the market is showing a gradual slowdown. So the outlook in 2H17 might remain dull.

On the other hand, the higher management fees in the hedge fund industry are also affecting investors’ returns. All these factors are indicating that the fund inflows will be flat in 2H17.

In the next part of this series, we’ll analyze how the different sectors of the S&P 500 Index have performed so far this year.

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