Big investors resist major stock sell off: Reuters poll

By Jeremy Gaunt, European Investment Correspondent

LONDON (BestGrowthStock) – Institutional investors hung on to their equities exposure more than might have been thought in May, given extreme volatility on financial markets, but also put more money in safe-haven cash, Reuters polls showed on Thursday.

Demand for alternatives, which include gold, rose. But perhaps surprisingly in the face of regional crisis, investors increased exposure to euro zone equities.

Surveys of 47 leading investment houses in the United States, Japan, Britain and continental Europe showed an average mixed portfolio holding 52.3 percent of its holdings in equities.

This compares with 52.8 percent in April, but is a relatively small decline given that MSCI’s all-country world stock index (.MIWD00000PUS: ) has fallen close to 12 percent in the period between polls.

At the same time, they cut back slightly more on bonds — to 34.9 percent of a portfolio compared with April’s 35.5 percent and put money into cash. Cash holdings rose to 5.1 percent from 4.7 percent.

With the month dominated by the crisis in euro zone debt, managers in the polls, longer-term investors were not universally glum.

“We expect the global economy to gradually move to a sustainable recovery path on improvements in employment and capital spending, centering on the United States. The world’s share markets will likely return to an uptrend,” said Kenichi Kubo, senior fund manager at Tokio Marine Asset Management.

The polls even showed relative faith in Europe, the center of the current crisis. Allocations within equities to the euro zone rose to 23.2 percent from 22.2 percent a month earlier.

Despite this, concern remained that the euro zone crisis and the government cost-cutting needed to solve it could harm future economic growth.

“I do think what’s happening will result in slower growth in Europe,” said Steven Bleiberg, head of global asset allocation at Legg Mason Inc.

REGIONALLY

U.S. fund managers held on to their high exposure to equities. Based on 11 U.S.-based management firms surveyed between May 18 and 26, the poll found an average of 65.2 percent of assets in equities, unchanged from April.

Managers also cut bond holdings to an average of 28.8 percent in May, from 29.5 percent in April, while raising cash exposure to 2 percent, from 1.7 percent.

Continental European investors lifted their cash holdings to its highest in at least a year in May and cut back on bonds.

The poll of 13 Europe-based asset management companies showed a typical mixed portfolio holding 47.9 percent of its assets in equities this month, up from 47.5 percent in April.

The allocation to bonds — which includes government bonds and corporate debt — fell to 38.1 percent from 39.7 percent. Cash rose to 8.0 percent from 6.9 percent.

Japanese fund managers slightly raised their weighting for stocks in May from the previous month’s seven-year low.

The average share weighting among 11 institutions edged up to 45.0 percent from 44.8 percent in April.

The average bond weighting dropped to 48.4 percent from a 10-month high of 49.1 percent in April. The weighting for cash rose slightly to 3.3 percent from 3.1 percent.

British fund managers continued to reduce exposure to equities in favor of bonds.

The survey of 12 fund managers showed allocations to equities dropped for the third month running, falling to 50.9 percent in the average global balanced portfolio in May, from 53.5 the previous month.

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(Additional reporting by Jennifer Ablan, Natsuko Waki, Chris Vellacott, Akiko Takeda and Bangalore Polling Unit; Editing by Toby Chopra)

Big investors resist major stock sell off: Reuters poll