Soros’ bearish bet predicts fall in S&P 500

According to filings on the US stock exchange, George Soros’ firm increased its put option – essentially giving itself protection against a short-term fall in security prices – on the index by 154 per cent.

This means his hedge against the market now stands at $1.3bn (£0.8bn), which accounts for 11.13 per cent of the reported holdings of his $7.968bn hedge fund. But not all US fund managers share Mr Soros’ gloomy view of the S&P 500, although all agree some heat will be taken off the index after seeing a strong rise in equities in 2013.

Gary Potter, co-manager of F&C’s Thames River range of multi-manager portfolios, said he had just returned from the US last week and said he was generally “not concerned” about the US market.

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Within the portfolios, he has reduced US equity exposure from overweight to neutral, taking the profits off some funds, especially small-caps.

Mark Burgess, chief investment officer for Threadneedle Investments, said: “There have been some disappointing figures, for example, on payroll growth and auto sales. These will need to be watched carefully.”

He added the US was “becoming an increasingly attractive base for manufacturing activity”, prompting Threadneedle to raise its forecast for US GDP growth to 2.7 per cent for 2014.

Adviser view

Gavin Haynes, director of Bristol-based Whitechurch Securities, said: “While Mr Soros has taken a put option on the S&P 500 index, it doesn’t necessarıly mean he is totally bearısh on US stocks. It appears he is pursuing it as part of a strategy where he is taking selective long positions in US stocks he believes will outperform the market.”