Risk aversion stalked global investors as they cashed in on their stock holdings and preferred to stay liquid ahead of an expected rise in U.S. rates, according to the latest BofA Merrill Lynch fund manager survey held this month.
A possible default by Greece on its debts and a correction in China’s roaring equities market also kept investors edgy.
As a result, cash holdings rose 4.9% of portfolios in June (the highest since January) from 4.5% in May, the bank said in a statement. The proportion of investors who were overweight on equities slipped to a net 38% from 47% during the period.
“Fed and Greece (are the top) concerns,” a summary of the report said. “Investors sell stocks, reduce risks and raise cash over the past four weeks.”
The probability that Greece won’t be able to pay its debts — particularly with the IMF due at the end this month – increased after talks between the country and its creditors crumbled over the weekend.
But investors polled appeared to be not positioned for a “Greek worst case” scenario as 43% were expecting a resolution, while 42% were saying there would be a default but Greece won’t exit from the eurozone, BofA Merrill Lynch said.
On the Fed rate hike, 54% of investors surveyed were expecting the U.S. policymakers to start raising rates in September, it said.
As worries increased, the percentage of investors who took out “protection” versus a possible fall in equities over the next three months reached a record high.
A total of 207 investors with a combined $562 billion AUM participated in the survey, which was conducted on June 5 to 11, 2015.
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