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British investors increased their cash levels for a second month in April on concerns about the stability of world markets even as systemic risks from the euro zone receded, a Reuters poll showed. In a monthly survey of 14 investment managers, the average allocation to cash in their global balanced portfolios rose to 5.8 percent, from 5.6 percent in March and compared with 5 percent in January.
While the shift to cash indicates investors are building up defences against a possible market correction, exposure is still well below levels above 8 percent seen in the middle of 2012 when the European debt crisis raged. Exposure to equities slipped for the second consecutive month to 54.6 percent following several months of increases during a market rebound in the second half of 2012. But while money taken out of stocks is usually re-allocated to bonds, seen as a less volatile asset class and a safe haven in times of market stress, bond allocations have continued a slide that began late last year, to 25.4 percent.
"What is more risky? Bonds issued by indebted governments or corporations offering negative real yields and the prospect, at some point, of capital loss, or equities issued by mature, cash-rich, businesses, with strong earnings, progressive dividend policies and offering attractive real returns?" said Mark Robinson, chief investment officer at Berry Asset Management. However, while the rush to put bigger bets on stocks has paused in recent weeks, most of the investors believe the world has moved on from the near-panic seen in the wake of the financial crisis, even if some expect more volatility to come.

Copyright Reuters, 2013

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