Investors make highest cash weightings in 20 years
Global fund managers are holding the highest levels of cash since 9/11, according to Bank of America research.
The September edition of the monthly Global Fund Manager survey found professional investors were holding 6.1% in cash. BoA said this was “only ever higher after 9/11” in October 2001 and was up from 5.7% in August. The long-term average for cash weightings was 4.8%.
Cash allocations were at a record overweight at 62% at the expense of equities and a record number of investors (61%) said they were taking lower-than-normal risk.
The reason for the above-average defensiveness was fears of a recession as 68% said they believed a recession was “likely” and 70% of respondents said they expected the energy crisis to cause a European recession.
Respondents were most bearish on the Eurozone, where allocations to European equities were at the most underweight ever, and least on the US with the UK also experiencing high bearish sentiment.
Looking at sectors, they were bullish on healthcare and consumer staples and bearish on discretionary stocks, industrials and utilities.
On the positive side, respondents felt that inflation had hit its peak and was likely to slow going forward after steep rises earlier this year. Over three-quarters of respondents said they expected to see slower inflation in the next 12 months, indicating inflation had peaked in August when the global inflation rate was 9.3%.
However, the threat of inflation remaining high was cited as the biggest tail risk to markets followed by hawkish central banks.
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
