Global funds cut share holdings to five-year lows as Brexit bites

Fri Jul 29, 2016 7:06am EDT
 
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By Claire Milhench

LONDON (Reuters) - Global investors dumped equities in July and raised bond allocations after Britain's vote to leave the European Union and subsequent signs of damage to economic growth prompted a dash toward fixed income.

The Reuters monthly poll of 44 fund managers and chief investment officers in the United States, Europe, Britain and Japan was conducted between July 15 and 28 and is the first to fully reflect the fallout from the Brexit vote.

After the vote, sterling crashed to 31-year lows and some $2 trillion was wiped off global stock markets, as investors stampeded into the safe haven of bonds.

Markets have recouped some of the losses, but data released since then indicates the fallout will spread through the British economy and the rest of Europe.

"After the UK referendum, we are increasingly biased toward a risk-off stance," said Matteo Germano, global head of multi-asset investments at Pioneer Investments.

"Scarce visibility on the political front leads us to take an even more cautious approach toward equities - especially in developed markets and Europe."

The poll showed equity holdings at 42.9 percent in investors' global balanced portfolios, down from 45.6 percent in June - the lowest in at least five years.

At the same time, they raised the weighting of bonds to 40.9 percent from 38.1 percent in June, also the highest level in at least five years.   Continued...

 
A worker shelters from the rain as he passes the London Stock Exchange in the City of London at lunchtime October 1, 2008.  REUTERS/Toby Melville/File Photo