Global Fund Managers Cut Equity Exposure
Global funds recently recommended a cut to equity allocations in their model balanced portfolio after the allocation touched a two-year high in January, a Reuters poll showed.
The monthly poll done by Reuters between 11 February to 27 February, showed equity exposure on average fell by 0.6 percentage points to 49.1 percent in a global balanced portfolio from January, which was at a two-year high.
«At present, we feel it is appropriate to err on the side of caution until the scale and impact of the virus, and the longer-term economic implications, are slightly better understood and quantifiable than they are today,» said Mark Robinson, chief investment officer at Bordier & Cie U.K., who was quoted in «Reuters».
Increase on Bond Holdings
The survey of 38 wealth managers and CIOs in Europe, the United States, Britain, and Japan, reveals an increase in bond holdings. Bond allocations have increased to 41.4 percent on average from 40.3 percent.
In addition, most of the fund managers surveyed said they would maintain the current risk positioning or they would reduce exposure to riskier assets over the next six months. That suggests fund managers are not confident about a significant lift-off in stocks over the coming months despite common expectations of monetary policy easing.
Top Concern
A separate Reuters poll of economists showed major economies in Asia would slow down significantly, stall or shrink outright in the current quarter, as regional economies get impacted by the virus outbreak.
«The coronavirus outbreak remains our top near-term concern for global growth and the markets. The immediate impact appears to be concentrated in Asia, but all governments are taking the threats very seriously and are taking steps to contain the spread of the virus,» said Alan Gayle, president at Via Nova Investment Management.
