Even fund global managers are skittish

If you think fear of equity markets is the mark of the individual retail investor, think again. According to a survey by HSBC, global fund managers are shifting assets out of stocks and into bonds and cash in the final quarter of 2011.

“The survey shows a significant shift in sentiment across global fund managers as prolonged uncertainty in Europe and insipid US prospects continue to hinder global economic growth,” said Simon Williams, group head of wealth management, retail banking and wealth management, HSBC. “The end of the quarter will be marked by a flight to ‘safe havens’ and a more cautious view on risky assets as investors wait for things to turn in 2012.”

Illustrating that point, the percentage of managers who had a positive view on equities fell from 63% in Q3 to just 30% in Q4. Half of managers are underweighting stocks, compared to just 25% who were underweight in Q3

Managers aren’t exactly enamored by the bond market either; only 22% said they were bullish on fixed income, while 56% said they were neutral. In the third quarter, no managers said they were bullish on bonds, while 43% were neutral.

Cash is king again, it would seem, as 44% of managers surveyed said they were overweight, up from zero in the third quarter.

An analysis of net fund flows found that Greater China equities were back in vogue, with a 5.5% increase in assets, compared to a 7.6% outflow in Q3. In second place were Asian bonds, which saw a 4.7% increase in funds, but that’s down from 12.1% in the third quarter.

Funds are flowing into European and British stocks, which saw a 2.9% increase in assets, while North American equities saw outflows of 2.7%. Global equities were hit by 2.9% outflows, while emerging markets/high yield bonds posted outflows of 4.2%.

Japanese equities saw net outflows of 4.4%, while Asia-Pacific ex-Japan equities saw 6.4% in fund outflows.

“Customers who have been used to investing in a relatively more predictable environment where sentiment was less likely to cloud investment choices will find these times challenging,” said Williams. “The key to weathering the current investment climate is to stay close to your portfolio and together with a trusted professional adviser, regularly review your asset allocation strategy to aim for balanced and diversified holdings.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.