Hedge fund managers braced against a market fall this month because of rising geopolitical risk between the U.S. and North Korea.
Tensions escalated again when North Korea launched a missile over Japan on Tuesday local time, driving U.S. stock index futures lower. In response, President Donald Trump later said in a statement, "All options are on the table" for North Korea.
Earlier in August, he warned that any additional threats from North Korea "will be met with fire, fury and frankly power the likes of which this world has never seen before."
Hedge fund managers have been adjusting their portfolios. Bridgewater's Ray Dalio, manager of the world's largest hedge fund with $160 billion in assets, specifically cited the potential conflict between U.S. and North Korea leaders for his recommendation to buy safe haven assets.
"Prospective risks are now rising and do not appear appropriately priced in," Dalio wrote in a LinkedIn blog post on Aug. 10.