More Hedge Fund Assets are in Cash
As financial market conditions become more volatile and as the banking crisis appears far from over, many hedge funds are socking away a larger portion of their assets in cash. Edward A.H. Siedle, president of Benchmark Financial Services Inc., an Ocean Ridge, Fla.-based pension consulting firm says "The risk-reward scenario is not favorable right now, and a half-percent return versus another Lehman Brothers-like loss is not worth it."
Horizon Cash Management manages billions in cash for hedge funds. Senior Portfolio Manager, Jill King says "There's a greater need for liquidity in this market, and I think pension funds are sitting on a ton of cash right now." According to Craig Columbus, President of Arizona based hedge fund Advanced Equities Asset Management. "Right now, we're dealing with some of the great challenges of low-yield investing,"
Some other quotes from hedge fund managers regarding their decisions to go to cash:
- Bill Quinn, Chairman of American Beacon Advisors, a Fort Worth, TX based hedge fund: "People have gotten very conservative when it comes to cash, and the Reserve Fund gave a bad blemish to any money market fund not associated with a financial institution with a lot of capital,"
- John Nowicki, President of LCM Capital Management, a Chicago based hedge fund: "We thought it was a no-brainer decision to move our clients' money out of prime money market funds two years ago and into Treasury money market funds,"
- Craig Columbus, President of Advanced Equities Asset Management, a Scottsdale, AZ based hedge fund: "There's lots of concern from a credit quality perspective surrounding [non-Treasury] prime money market funds,"