European fund managers slashed their holdings of equities further in July, preferring the safety of cash and increasing their exposure to US assets as a shield against the euro zone debt crisis, a recent Reuters poll showed.
Twenty asset managers based in continental Europe who were surveyed cut their equity holdings to 40.8 percent on average in July, the lowest level in at least nine years according to monthly Reuters polls, from 42.2 percent in June.
"Equities have been depressed by a very negative scenario, especially in the last two to three months: the euro zone debt crisis woes have been coupled with global macroeconomic risks and the deceleration of emerging countries," said Nicola Trivelli, Chief Executive Officer of Italian fund Sella Gestioni.
Equities slipped to second place in terms of asset allocation this month, overtaken by bond holdings which became the main asset class in portfolios with an average allocation of 41.2 percent.
"We went underweight equities, as we see the European situation as a downside risk," said Joost van Leenders, strategist at BNP Paribas Investment Partners. "We also see the economic cycle and earnings downgrades as somewhat negative for equities, although a lot has been discounted." Looking at allocation strategy by region, the share of US assets held by European fund managers continued to increase in July, both for equities (41.8 percent) and bonds (27.0 percent), with fund managers pointing to persistent worries over the euro zone crisis, heightened by Moody's warning that EU paymaster Germany might lose its AAA credit rating.
After lurching back to euro zone debt in June on relief that pro-bailout parties had won the Greek election, fund managers trimmed their exposure to the bloc's debt in July to 52.7 percent of bond portfolios, from 53.1 percent.
Comments
Comments are closed.