Analysis: Major hedge funds cut back equity risk

In addition to the shift out of equities, there has been a shift to more traditional, stable investments within the stock market.

The shift, evident in second-quarter securities filings, is not as simple as leaving equities behind, as many small investors have been doing recently.

Instead, many money managers have shifted to more defensive investments like utilities and high dividend plays, according to a Thomson Reuters review of portfolio disclosures by 30 of the largest fundamentally-oriented hedge funds.

"You're not in that investment mindset of a few years ago any more, and a lot of risk has been taken off the table already," said Steve Goldman, senior market strategist at Weeden & Co in Greenwich, Connecticut. "The consumer is in dire straits, the economy's resilience has been disappointing, and everybody's bracing for it."