13/04/2016
Investors maintain high levels of cash
Fears of a failure of quantitative easing policies implemented by central banks worldwide have driven investors to maintain high allocations to cash. The level of cash has risen to 5.4% of assets worldwide in April, compared with 5.1% in March, and is nearing its peaks of 15 years ago (5.6%), according to the most recent Bank of America Merrill Lynch Global Research survey, undertaken between 1 and 7 April, and covering respondents representing total assets of USD596bn.The vast majority of managers are continuing to predict two interest rate hikes, and no more than that, by the US Federal Reserve in the next 12 months, though the failure of quantitative easing policies represents one of the most important extreme risks. Only 14% of investors feel a Brexit scenario is “probable.” A corollary of this estimationn is that Europe remains the preferred global area for investment.A record percentage of asset managers estimates that European monetary policy is “too accommodating,” though confidence in this policy as a driver of economic growth has fallen to 15%, compared with 24% in March. Investors are also continuing to underweight allocations to emerging markets, but allocation levels are improving and profit outlooks are improving, as onlyl 16% of respondents expressed an unfavourable opinion, compared with 34% previously. 36% of investors estimate that emerging market currencies are undervalued, a level not seen since March 2013.
