An article late last week suggests that hedge funds (or at least some hedge funds - the article lacks clarity) currently are holding historic levels of cash in circumstances where they:
- are concerned that the 'big three' current world economic issues (my words) - the Eurozone debt crisis, the so-called U.S. fiscal cliff, and China's slowdown - will cause a "2008-like reaction around the globe"; and,
- continue to collect 2% annual fees on that cash being held - generating on the cash portion of their portfolio holdings what is likely to be a negative annual return for those invested in a fund holding significant cash.
While this is interesting, and worth noting if you trade or invest in the financial markets, the article unfortunately does not go to the 'next step' and attempt to quantify what percentage or 'range of percentages' of total amounts under administration that the hedge funds currently are holding in cash. If the number is, say, 5% that is 'no big deal'. On the other hand if the number is 50% that would be 'a huge deal' - and a very clear indicator of current financial markets distrust on the part of the hedge funds. At least as I see things.
I have been unable to find any (what I consider to be) meaningful study or studies that purport to quantify the amount of cash currently being held by hedge funds. If you are aware of any such study please forward the URL to me at firstname.lastname@example.org.