Cash holdings among global fund managers have risen to their highest level since the 9/11 terrorist attacks in the US in a shift that reflects large investors’ worries about the deteriorating outlook for stock markets.
Cash balances have swelled to 6.1 per cent on average across the portfolios of global asset allocators according to Bank of America, which canvassed views from 288 investment professionals that together oversee assets of $833bn for pensions plans, insurance companies, asset managers and hedge funds.
The shift into cash — which is typically in vogue during periods of heightened risk aversion — coincides with a significant weakening in expectations about corporate earnings. A net 66 per cent of fund managers in May said they expected global profits to weaken, a low comparable to other crisis periods including the 2008 implosion of Lehman Brothers and after the dotcom bubble bust in 2000.