According to Goldman Sachs, trend-following funds, often referred to as CTAs, added $12.6 billion in U.S. equities during August, bringing their exposure to the highest historical level.
The bank’s market flow analysts highlight that these investors are now “maxed out” on their positions. While this does not directly create selling pressure, it implies that support from CTA flows may be limited in September—a month historically prone to weaker market performance.
Goldman Sachs cautions that the risk balance is tilted “asymmetrically to the downside,” estimating that a market downturn could trigger selling of up to $73.7 billion in U.S. equities from these trend-following investors.
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