LONDON (Reuters) – Cash is still king for investors heading into the summer slowdown.
Increasing a cash buffer is typical during times of economic and geopolitical strife.
But data and interviews with global wealth managers show that hoarding has continued at unusually high levels even as global stocks have rallied this year amid conflicting signals after the central banks’ U-turns, mixed macroeconomic data and fresh tumult in Washington’s spat with China.
The pan-European STOXX 600 and S&P 500 are up 11% and 12% respectively for the year to date.
However, many U.S. investors have still been lured by the outperformance of U.S. Treasury bonds compared with total returns in U.S. equities over the past six months.
Millionaires were hoarding as much as a third of their wealth in cash in March, up from less than a quarter at the end of last year, according to a client survey by UBS Asset Management.
UBS doesn’t have historical data for global allocation, but Chief Executive Officer Sergio Ermotti described cash levels as astonishing and said in March U.S. holdings were at records.
Global funds on average allocated 6.4% of their portfolios to cash in the first quarter, the highest on records going back to 2013, according to Reuters’ survey. [ASSET/WRAP]
That level shrank to 5.2% last month, but it is still above historical levels, Reuters records show.
Graphic: Cash stash, click tmsnrt.rs/2M1CyUr