Citadel Securities: Systematic funds preparing to re-leverage and buy stocks

Odaily Planet Daily News Citadel Securities' head of stock and derivatives strategy, Scott Rubner, stated that the deleveraging reset in U.S. stocks has largely been completed. As volatility declines, the room for systematic strategies to increase equity exposure is expanding. Market breadth is improving, correlations are near historic lows, and investors are increasingly willing to pay a premium for upside potential. The next meaningful mechanical flow could be re-leveraging rather than continued deleveraging.

Citadel Securities data shows that assets under management in leveraged ETFs have fallen from $218 billion at the end of June to $154 billion in July, a decline of nearly 42%. Among these, semiconductor leveraged ETFs hold approximately $31 billion in assets. Other Wall Street institutions have observed similar trends. Morgan Stanley's Prime Brokerage team noted that after record deleveraging at the end of July, funds began restoring capital and re-buying global stocks last week. (Bloomberg)