Asset managers feel increasingly bearish on the short-term outlook for global markets and have increased their cash holdings to the highest level since 2001.
Overall, cash levels rose to 5.5%, up from 5.4% in August, with 42% saying a darkening market outlook had prompted them, according to the September Bank of America Merrill Lynch fund manager survey.
In total, 20% said they preferred holding cash to low yielding, “overpriced” bonds and equities. In all, 54% of investors said these asset classes were now overvalued, an all-time high according to the survey, and the highest level evidenced since May 2000.
Certain potential headwinds, most notably the disintegration of the EU, concern asset managers – 23% said this was a primary concern, more than were worried about a Donald Trump victory in the US presidential election in November.
Managers also expect low to negative interest rates to persist, with 83% believing the Bank of Japan and European Central Bank will maintain negative rates for the next 12 months at least.
On a more positive side, 26% expect higher global growth in the next year.
Manish Kabra, European investment strategist at Bank of America Merrill Lynch, said macro optimism had returned to pre-Brexit levels, with economic growth expectations at their strongest since June.
©2016 funds europe
