U.S. investors have started to go shopping abroad for assets for the first time year.
According to UBS, the proportion of mutual funds’ portfolios held in foreign assets rose to 24.5 percent in May from the 23 percent level they kept until then.
From 2002-2008 U.S. mutual funds sharply increased their exposure to overseas assets, going as high as 26 percent in mid-2008 from 12.5 percent. After the collapse of Lehman Brothers they have cut back to 23 percent.
“U.S. investors have begun to return to overseas markets as risk assets recovered in Q2 2009. This has undermined the dollar. But if market sentiment becomes risk averse again in H2 2009 then US investors are likely to curb their dollar diversification once more,” the Swiss bank says in a note.