World investors' cash holdings highest since 2012: Reuters poll

Fri Jan 30, 2015 8:26am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Chris Vellacott

LONDON (Reuters) - World investors increased cash holdings in January as they braced for a choppy year with markets buffeted by conflicting forces such as diverging monetary policy and rising geopolitical risks, a Reuters poll shows.

A monthly survey of fund managers in the United States, Japan, Europe and Britain found the average allocation to cash in balanced portfolios jumped 1-1/2 percentage points to 7 percent -- the highest since May 2012. Forty-four institutions took part in the poll.

Investors typically increase holdings of cash when they expect markets to fall, often at the expense of more volatile assets such as stocks.

The average allocation to equities remained unchanged at 48.2 percent, though bond holdings fell to 36.6 percent from 38.2 percent. Holdings of property were down to 1.9 percent from 2.6 percent while exposure to alternative assets, such as hedge funds and private equity, rose to 6.4 percent from 5.3 percent.

"The overriding feature for 2015 will be bouts of higher volatility and risk-off episodes that mean investors will need to be far more wary," said Ashok Shah, investment director at British investment manager London & Capital.

The polling period was dominated by the European Central Bank's announcement last week that it would start buying bonds under a 1 trillion euro quantitative easing program from March with the aim of stimulating euro zone growth and inflation.

In contrast, monetary authorities in the United States are widely expected to start raising interest rates, bringing an end to an era of monetary stimulus launched in response to the 2008-9 financial crisis.

  Continued...

 
A picture illustration shows U.S. 100 dollar bank notes and Japanese 10,000 yen notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao