Hedge funds' exposure to cyclical versus defensive sectors is at an all-time low, according to BofA Savita. Goldman Sachs' hedge fund chief, Tony Pasquariello, has advised cutting portfolio risk, warning that while it is a bull market, the probability of a drawdown is increasing. He noted that the risk of a selloff rises as the rally narrows. Additionally, the cost to hedge portfolios against an S&P 500 decline has fallen to its lowest level in five years, indicating potential complacency and over-crowdedness in the market. Hedging costs for US and European stocks are also at all-time lows.