You are here: Home - Investing - Experienced Investor - News -

Managers cut cash holdings as appetite for risk increases

Written by: Adam Lewis
Global investors have cut their cash holdings and increased their exposure to equities, real estate and alternative investments, according to the Bank of America Merrill Lynch.

In its latest November fund manager survey, the Bank of America Merrill Lynch found that investors were regaining their appetite to take risk, with 81% of those managers questioned – who collectively manage $576bn in assets under management – expecting the US Federal Reserve to increase interest rates in December. Last month just 47% of managers were predicting the Fed to move in December.

The result has been a large swing to equities during the last month, with the percentage of asset allocators overweight in equities rising 17 percentage points to a net 43%. At the time they cut the degree of their overweight position in cash to the lowest level since July this year, down from 5.1% to 4.9%.

This increase may have been buoyed by their more optimistic outlook on the prospects for the global economy, with net expectations of it strengthening within the next 12 months rising 22 percentage points compared with October.

While asset allocators remained aggressively underweight in commodities and global emerging markets, their exposure to real estate and alternative investments rose to their second-highest readings in the survey’s history.

In terms of country positions, the eurozone and Japan remained the most favoured regions globally. Meanwhile growth expectations in China jumped to its highest level in 15 months, with a net 4% of managers only predicting a weaker economy in the next 12 months (down from a net 22% last month).

Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, said: “With consensus very clustered in QE and strong dollar trades, asset price upside appears limited until an ‘event’ curtails the Fed hiking cycle, as in 1984.”

Manish Kabra, head of European quantitative strategy, added: “While European equities are loved by global investors and the ECB has created some excitement about growth, sector positioning shows local asset managers are lacking conviction and hugging their benchmarks.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Black Friday do’s and don’ts

Black Friday falls on 27 November this year. What are the best and worst ways to take advantage of this...