Top Holdings of Hedge Funds

Retail investors have reduced their positions recently. However, hedge funds remain heavily invested and highly leveraged.

Retail investors perceive elevated risk in this market.  They have reduced their holdings accordingly.  There reasons for this are simple. U.S. stocks are near record levels, and #volatility has increased recently.

According to the latest monthly AAII Individual Investor Asset Allocation Survey, stock exposure has been creeping lower for months.  In April equity holdings came in at 67.5% of the average investor’s portfolio. That represented the lowest ratio since August.  Furthermore, it represented the fourth straight month where the percentage of equity holdings declined.

Among those investor classes that have not reduced their portfolios are hedge funds.  They remain weighted toward the U.S. stock market.  However, even here the general trend has been a modest paring down of exposure.

Meanwhile cash holdings jumped to 16.6%.  This was the highest level since May of 2017.

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Among #hedge funds, the largest holdings have been Microsoft Corporation (MSFT), Facebook, Inc. (FB), Adobe Systems Incorporated (ADBE) and United Technologies Corporation (UTX).

What does Goldman say?

Goldman Sachs is among the major Wall Street firms that are warming up to cash.  They foresee a period of heavy uncertainty for both stocks and bonds.

Goldman upgraded cash to overweight on a short-term basis of three months.

The higher view toward cash is a move to reduce risk.  This according to Christian Mueller-Glissmann, an equity strategist at Goldman.

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