Hedge funds are pushing back against the regulators who blame them for stoking extraordinary market volatility in March when the pandemic hit.
The Washington-based Managed Funds Association says its members lack the firepower to disrupt the $20 trillion U.S. Treasuries market, as executives at the Bank of England and Bank for International Settlements have said.
The lobby, whose members manage about $1.6 trillion of assets, funded research by Harvard Business School Professor Marco di Maggio that points the finger at foreign institutions as big sellers of Treasuries. And the part of the Treasury market that the funds tended to trade — the cheapest-to-deliver bonds — didn’t suffer the same upheaval, Di Maggio wrote.
“Aggregate Treasury positions held by hedge funds were far too small to be the main cause of the disruptions,” Di Maggio wrote.
Read more: Before Fed acted, leverage burned hedge funds in Treasury market
In contrast, the