The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Cash: Hedge fund cash holdings reach highs

According to market participants, cash holdings are at an all-time high among investment managers.

In particular, equity hedge funds have been building up cash reserves. Merrill Lynch’s March fund manager survey revealed the highest cash positions relative to margin debt since 2003. Survey respondents were less aggressively overweight in April, but still overweight.

In part, the build-up of cash is attributed to deleveraging by several funds. For certain strategies, cash is being built up ready to deploy when new opportunities in distressed assets arise. Some managers are simply liquidating positions while they wait for the markets to become less volatile.

Where this cash is held is becoming an increasingly important decision for managers. Over the past five years, there has been a trend to take cash out of prime brokers’ hands and put it into the coffers of independent cash managers. This trend has accelerated since the credit crunch as managers have become fearful that their prime brokers will seize the cash to meet margin requirements.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree