LONDON May 30 European fund managers took cash
and put it into shares and bonds this month, viewing that major
central bank banks will retain loose monetary policy for some
time, a Reuters survey showed.
Fund managers in the poll, released on Friday, slashed cash
levels to their lowest in 10 months in May and lifted equity
holdings to their highest since January. They also increased
their bond positions from April.
Market volatility has eased as investors have seen more
clarity in monetary policy of the world's major central banks,
with the European Central Bank widely expected to cut interest
rates next week as it seeks to stave off the risk of deflation.
"While there is considerable deflation risk in Europe, we
believe that the ECB will help with new measures to increase
liquidity," said Sandra Crowl, a member of the investment
committee at Carmignac.
U.S. interest rates are also expected to stay low for
longer, following mixed economic data recently.
The survey polled 19 asset managers in continental Europe
from May 12 to 28, at a time when U.S. stocks reached record
highs and risky corporate debt and emerging stocks also rallied.
Equity weightings rose to a five-month high of 48.1
percent, above the long-term average of around 46 percent, while
cash levels dropped to 7.9 percent from 9.5 percent in April.
Overall bond holdings within the model portfolio rose to
37.5 percent, from 36.7 percent in the previous month.
The respondents cut North American equity holdings to 37.4
percent from 39 percent, putting more money into Britain among
Holdings of emerging market bonds - in Eastern and Central
Europe, Asia and Latin America - rose. Emerging European bond
holdings climbed to their highest in 10 months at 1.8 percent,
with investors comparing yields favourably to euro zone debt.
North American bond holdings rose to 22.6 percent, their
highest since October, but euro zone debt holdings fell to their
lowest since January, at 60.2 percent.
Investors remained overweight in riskier corporate bonds,
while they disliked lower-yielding developed market bonds in the
United States, the euro zone and Japan.
(Editing by Susan Fenton)