Jul 9, 2025 - Business
Hedge funds skipped out on TACO Tuesday
Add Axios as your preferred source to
see more of our stories on Google.

Hedge funds are ramping up their bets against the S&P 500, rally or not.
Why it matters: As the TACO trade roars on, institutional investors are protecting themselves against downside risk.
The big picture: Net short positions are at their most bearish level since March 2024, according to Liz Ann Sonders, chief investment strategist at Charles Schwab.
- The bearish positions increased toward the end of the second quarter, perhaps in response to the market volatility in the first half of the year, according to the chart.
- Short positions let funds profit if the market falls, serving as a hedge or a direct bet against the rally.
Between the lines: Selling in the week ending July 4 was driven primarily by institutional clients, per research from Bank of America, even as the market continued to reach new record highs.
- Hedge funds were net sellers for a third consecutive week.
- Clients sold stocks across all 11 sectors for the first time since November 2022, when investors were recovering from a bear market.
The bottom line: It's not all TACOs.
- Investors were burned in April, and part of the recovery from that may mean getting hedged up to survive any continued volatility ahead.
