Global fund managers dash for cash
The research found the average cash balance of funds run by global asset allocators hit 5.6% in February, as investors showed a preference for capital preservation at the expense of growth.
Indeed allocations to bonds also surged to their highest level since November 2012, while those overweight in equities fell from a net 21% in January, to just a net 5% in February.
Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, says: “Investors have ‘reset’ expectations for macro and markets lower and see default/recession as a risk rather than a reality.”
Backing up this statement, according to the February survey global growth and profit expectations expectations among fund managers turned negative for the first time since July 2012. A net 16% of investors now expect a weaker global economy in the next 12 months, while a net 19% believe a recession will occur within the same timeframe.
Looking towards what is happening in the US, some 90% of the managers surveyed said they expect no more than two more interest rate rises from the Federal Reserve in the next 12 months, more than double from the 40% who predicted the same in December last year.
An overall total of 198 panellists with $591bn of assets under management participated in the survey, which took place between 5-11 February.