There has been a mass exodus in the corporate bond market which is making fixed-income funds as attractive as they have been in a while. Outflows started 21 weeks ago and are hitting $28 billion according to Refinitiv Lipper. With investors fleeing this has created even more negative returns on top of inflation and interest rate pressure. Investors willing to hold bonds to completion, particularly in value sectors like banking are getting them at an ultra bargain. One reason we are seeing investors flee corporate bonds is yields have been climbing faster than treasuries but many see interest rate risk already priced in which could be enough to turn around the investment-grade bond market.

Finsum: Value sector bond ETFs could be a smart play, with commodities and financials being major players. 

Investors were beginning to be skeptical of Hedge Fund performance, but volatility was enough to get them back in. Inflows this quarter have hit a 7-year high as they nearly hit $20 billion in Q1 2022. The biggest factors were inflation, the Fed’s response, and rising geopolitical tensions, which are all major sources of volatility recently. Macro strategy had the best performance for Q1 with a 9.1% return which is the highest its been in nearly 30 years. Multi-strategy and value were next up all with positive returns. The S&P 500 meanwhile dropped 5% over the same period. Corporate credit default and other short positions have been grabbed up by hedge funds recently to help counter volatility.

Finsum: This is a hedge fund's most crucial role in the financial world, they excel in these macro scenarios that are crippling standard markets. 

Most people think of alternatives as either a hedge in their portfolio against traditional market swings, or a big return generator with more risk, but REITs can be a great income generator. Dynex Captial is a great REIT with a 10.38% dividend as of April, and Citadel is a huge holder in the company. Gladstone Commercial real estate has a strong 6.71% dividend and never misses its distribution so it’s ultra-reliable. Finally, LTC Properties has a similar 6.31% dividend but has strong hedge fund love.  Their recent acquisition of LuxeRehab is a signal of their strength and has a good track record with tenants.

Finsum: REITs have lots of dividend options and are a good income alternative for those seeking a solution in this market, however it does have risk. 

Hedge funds have made it clear they are gonna short those not meeting ESG criteria, but the broader market is still willing to short Tesla because the bottom line means more. Despite all of its sustainability credentials investors are making bets against Tesla. Bill Gates took a big short position apparently, and Tesla CEO Elon Musk chirped back on Twitter, saying it's incompatible with their environmental concerns. All of this happens as Musk secured $44 billion to buy Twitter Inc. This isn't the first time Tesla is no stranger to short-sellers as sharks swarmed the brand for years as they thought they couldn't ramp up production to meet the actual demand. Tesla’s stock skyrocketed nonetheless.

Finsum: Short positions on these public favorites can be extremely risky poisons, there have been lots of strange rallies in the internet era.

Goldman Sachs released their latest economic forecast and predict the U.S. will grow at its second-highest rate in over 15 years. The 3.1% prediction would only be outpaced by the K-shaped recovery in 2021. Moreover, they said there is a lower risk of a recession in the next year than the rest of Wall Street with about a 15% chance. Attributing much of the inflation to supply chain issues, Goldman seems to be leaning on the latest core PCE inflation numbers that the Fed cares most about which were on the decline. The biggest ongoing risks to the world economy are China and the continuing Russia-Ukraine war.

Finsum: Goldman believes the Fed can thread the needle and hit the soft landing that many say is impossible, time will tell if they can.