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Average portfolio holdings barely changed in August as managers remained cautious over extent of global equity rally
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| BULL-BEAR SHOWDOWN Japanese investors lifted their stock exposure on growing confidence in the global economic recovery, but elsewhere, the mood was a bit less bullish |
LEADING investors kept their portfolios steady this month, a Reuters poll showed, as the northern summer doldrums and caution about how far the global equity market rally can go led many to sit back and wait.
Forty-four US, British, continental European and Japanese fund management companies held an average of 57.1 per cent of their portfolio holdings in equities, barely changed from 57.0 per cent in July, according to the asset allocation poll.
Bond holdings edged down to 34.5 per cent from 34.7 per cent and cash slipped to 3.3 per cent from 3.8 per cent. The remainder was allocated to hedge fund, property and other alternative investments. The average equity holding was held up primarily by Japanese investors, who lifted their stock exposure on growing confidence in the global economic recovery.
'US economic data is likely to keep improving, boosting investor confidence about a recovery. I think share prices will hit new highs in the autumn,' said Masaru Yamagishi, chief strategist at Japan's Sumitomo Mitsui Asset Management.
Elsewhere, the mood was a bit less bullish, although there was no sign of a major retreat from the risk rally that has run across financial markets since March. The view was simply cautious about the potential for the rally to slow.
'I think we're all in agreement that the upside potential of these markets is limited compared to what it was back in the late spring (and) early summer because we don't have the possibility of a relief rally any longer,' said David Joy, chief market strategist at US firm RiverSource Investments. The poll of 10 US-based asset management firms showed that they held an average of 64.1 per cent of their assets in equities, down from 64.9 per cent in July.
Holdings remain above the long-term US average for stocks of 63.5 per cent. Bond exposure rose to 29.2 per cent from 28.9 per cent. Cash also rose very slightly, to 2.0 per cent from 1.9 per cent.
European fund managers kept bond weightings above their five-year average this month while equity holdings stayed below the average.
The monthly survey of 13 investment houses in the region showed equity holdings fell to 44.6 per cent of their portfolios from 45.3 per cent in July, when 16 funds were polled. Bond holdings - which include government as well as corporate bonds - inched lower to 42.2 per cent from 42.7 per cent last month.
Japanese fund managers raised their average global stock weighting to the highest level in nearly a year and cut their bond allocations.
The poll of 12 fund managers showed their average stock allocation rose to 53.4 per cent last month from 50.9 per cent in July, the highest level since 55.2 per cent last September. They lowered their bond allocations for a second month in a row, with the average falling to 45.9 per cent from 46.8 per cent in July.
UK fund managers pared back their exposure to equities. British fund management firms who were included July's poll trimmed stocks to 66.4 per cent from 67.0 per cent in July.
Bond allocations edged up to 20.5 per cent from 20.3 per cent and cash remained unchanged at 6.1 per cent.
Eleven companies participated in the UK poll, with nine included in the like-for-like comparison. -- Reuters
(London)