Investors flee stock market
The defensive maneuvering is a further sign that some investors are too scared to be stuck holding risky stocks and bonds ahead of potential upcoming shocks. The biggest fear among survey respondents is Brexit, the U.
Rising support in favor of dumping the EU has already begun to cause market turmoil in recent days. Fund managers' average cash allocation jumped to 5. Hartnett noted other "big bear signals" as well, including investors displaying the lowest risk appetite in four years. Is there anywhere left to hide?
This is hardly the only time lately that investors have showered love on cash. Still, it's a tough time to be sitting in cash. Extremely low interest rates around the world mean money in the bank earns virtually nothing. And when inflation is factored in, cash actually loses value. The average money market and savings account carries an annual percentage yield of just 0. But that's better than losing money, which most people think is likely with volatile stocks.
It also doesn't help that investors have very few places to hide these days. Government debt is normally viewed as a safe haven, but it's hard to justify buying bonds, when there's nothing much to earn. German bond yields went negative for the first ever this week and the U. Treasury yield closed at a four-year low of 1. It's no wonder that BofA said the percentage of investors who think equity and bond markets are overvalued is the fourth-highest since it began tracking in How much will U.
What's more surprising is that fund managers don't think the U. Despite the recent flight to cash, two-thirds of investors surveyed think Brexit is either "unlikely" or "not at all likely. Similarly, fund managers are feeling more bullish about the outlook for global growth and corporate profits.
Both measures hit six-month highs in the June survey.
The other good news is that BofA considers high levels of cash a contrarian buy signal for stocks, in part because it leaves investors with lots of cash to put to work. Start your day right with the latest news driving global markets, from major stock movers and key economic headlines to important events on the calendar. Daily newsletter, Sunday through Friday. Most stock quote data provided by BATS.
Investors Flee Mutual Funds for Stocks, ETFs — Money and Markets - Financial Advice | Financial Investment Newsletter
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Retreat From U.S.-Stock Fund Managers Accelerates - WSJ
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Small Investors Flee Stocks, Changing Market Dynamics - WSJ
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