Commodity trading advisors (CTAs), the trend-following hedge funds that adjust allocations based on price momentum, are forecasted to accelerate their equity selling over the next month, regardless of how markets move, according to Goldman Sachs’ trading desk.
While CTAs currently hold $31 billion in U.S. equity short positions, they are still long $16.5 billion in global equities, suggesting more aggressive liquidation may occur outside the United States.
“Most of the expected flows are likely to happen internationally,” said Cullen Morgan, an equity derivatives trading specialist at Goldman Sachs.
Goldman estimates that CTAs could sell up to $70 billion worth of equities this week, and potentially $98 billion over the next month, depending on volatility and market reactions.
The majority of CTA flows related to U.S. indices—such as the S&P 500, Nasdaq 100, and Russell 2000—have already been executed, the report noted. However, volatility-sensitive investors remain net sellers of U.S. stocks.
If the projections hold, trend-following funds could collectively shift to a $60 billion net short position in global equities.
To monitor the potential impacts of CTA flows and volatility-driven moves, investors can use the following official FMP APIs:
\u2705 ETFs Holdings API: Track sector exposure through ETFs that may be influenced by systematic CTA strategies
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