Global Investing

from Jeremy Gaunt:

And the investor survey says…

Reuters asset allocation polls for August are out. They show very little change from July, which suggests investors are still cautious and uncertain about what is happening.

One big difference, month-on-month, was a large jump into investment grade corporate debt.  Andrew Milligan of Standard Life Investments reckons this  may in part  have been because  sovereign debt rallied so much over summer that returns from government bonds are now too meagre.

Here is the big picture:

Poll

Are investors building for a fall?

Reuters has taken its monthly snapshot of the investment choices of leading fund management houses across the world. At the end of July, the picture painted was one of investors embracing risk and shutting down their safest holdings.

Equity holdings as a percentage of a typical balanced portfolio were at their highest since the end of August last year, just a couple of weeks before Lehman Brothers collapsed. Here is what has been happening to equity holdings this year: 

At the same time, cash holdings have been cut back drastically. They are now at a level last seen in May 2007.  Here’s what that looks like:

Please invest, please

Hardly suprising that investment funds want their clients to cough up some money. It is, after all, how they get paid. So an appeal to pension funds from UBS Global Asset Management to stop sitting on the fence is not entirely pro bono. Nonetheless, a new note from the firm that trustees are actually risking things by hanging on to large cash reserves is worth a run through.

First, it says, there is the danger that they will lose out on any market recovery. UBS reckons stocks are well priced with high expected returns. It did not say so, but people sitting on cash in late November to early January missed a more than 25 percent rally in world stocks.

Second, UBS reckons hanging on to cash is not a good move given the amount of higher-yielding low-risk investments currently available. Some investment grade corporate bonds are trading at 10 percent-plus yields.

Recession is no secret

Mike Trudel, U.S.-based managing director and senior product specialist at BlackRock, has become convinced the economic recession really has arrived.

When he checked into London’s hip upmarket hotel Sanderson earlier this week, the staff uniform caught his eye.

Hotel staff were wearing black T-shirts, with RECESSION written in big letters in front. They highlighted SI in red – like this: