So-called trend following and systematic hedge funds have long positioned for a fall in government bond prices given higher-for-longer inflation., with bond yields from the United States to Germany this week hitting multi-year highs as concern about elevated interest rates and high debt levels took hold,
AlphaSimplex is a $7.9 billion trend following hedge fund. These funds use computer algorithms to find where markets might move and initiate trades which jump on for the ride, up or down. To manage the risk, the hedge fund's computer systems refocused its portfolio to benefit from the differences in values found in currencies and agricultural markets. The hedge fund still maintains a smaller short fixed income position.Instead of shrinking positions, some have diversified their holdings.