Global funds buy more bonds as China-fueled volatility surges: Reuters poll

Fri Aug 28, 2015 9:45am EDT
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By Sujata Rao

This month's wild ride in global stocks and fears of an emerging market crisis led funds to raise bond allocations to eight-month highs, even though most investors remain bullish on the outlook for Japan and the West.

The monthly Reuters survey of 47 fund managers and chief investment officers in the United States, Europe, Japan and Britain was conducted as Chinese authorities battled to stem an equity market collapse and bolster flagging economies.

A yuan devaluation and a steady stream of weak data have fanned fears that the economy is in worse shape than previously thought.

Chinese equities have fallen 45 percent from mid-June peaks, the resulting shock waves rippling as far out as New York and Frankfurt, wiping trillions of dollars off global stocks over the past month.

Steven Steyaert, senior portfolio specialist, Multi-Asset at NN Investment Partners, said investors needed to pay heed to possible feedback loops from markets to the world economy.

"For us, this environment justifies a more cautious asset allocation stance," said Steyaert, who has cut exposure to equities, real estate and credit.

"We have upgraded government bonds again after being much more cautious on them during most of the second quarter."

Broadly, the share of bonds in global balanced portfolios rose more than 1 percentage point to 37.2 percent. That is a whisker below December 2015 levels, which in turn were the highest in 18 months.   Continued...

An investor monitors share market prices in Kuala Lumpur, Malaysia, August 25, 2015. REUTERS/Olivia Harris