Big global investors are rediscovering their appetite for riskier investments, according to the latest monthly survey of asset managers from Bank of America Merrill Lynch.
The survey found that big global investors boosted holdings of equities and real estate in June and cut back on bonds and cash.
This increased optimism about the global economy, however, doesn’t reflect events in Iraq and the rise in oil prices because the survey was taken in the days before the Sunni militants launched stunning raids and advances.
Cash levels dropped to 4.5% from 5% in May, as investors grew more confident about putting their money to work.
Reflecting increased risk appetite, investors moved to an overweight position in emerging equities for the first time since November of last year – they were 5% net overweight from 11% underweight in May.
That would have been boosted by the moves from the European Central Bank to boost lending and make more money available. They survey was taken in the week of the ECB meeting.
The results of last week’s Fed meeting and comments on interest rates being lower for longer than the market had been expecting, will have justified this overweight stance.
Geopolitical risk dropped to third place, from first place in May, a ranking that is bound to be reversed in next month’s survey.
The monthly survey which polled 167 fund managers with combined assets of $US422 billion, showed asset allocation to equities rose to a net 48% overweight position in June from a net 37% in May’s survey.
(A net reading shows the difference between overweight and underweight positions.)
Interestingly, demand for real estate rose to a net 6% overweight this month, its highest overweight position in eight years.
That’s contrary to the growing belief that many real estate assets, especially housing, is overvalued and heading for a bubble.
China, Singapore, New Zealand Denmark, the UK and other parts of Europe are seen as danger areas for real estate investors (and according to the IMF).
