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British investors ratchet back up equity bets in April

Published 30/04/2014, 14:37
UK100
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By Jemima Kelly

LONDON (Reuters) - Top British investors bumped up their equity bets in April, preferring developed stock markets to volatile emerging markets, while pulling money out of safer assets such as cash and bonds.

A monthly poll of 11 UK-based investment managers released on Wednesday showed stock holdings had jumped to 55.6 percent from 52.9 percent in March, the highest level since at least June 2012.

Investors showed confidence in Britain's economic recovery, upping their holdings in UK equities by more than 5 percentage points to 29.6 percent, also the highest level since at least June 2012, and cutting cash holdings to an 11-month low of 5.9 percent.

That was reflected on Tuesday by a rise in Britain's blue-chip FTSE 100 LONDON:FTSE index to a 7-1/2 week high, boosted by strong corporate earnings.

Holdings in traditionally safer bonds, meanwhile, slumped to 22.5 percent, the lowest level since at least June 2012.

"Within fixed income we have become increasingly selective, preferring sectors with lower correlations to government bond yields and greater credit sensitivity, such as high yield and financials," said Matthew Farrell, investment specialist at London & Capital.

While a renewed demand for risk drove the equity flows - as well as allocations to alternative assets, such as private equity or hedge fund investments, which rose to a 19-month high of 12.4 percent - it was not all one-way.

Worries over tensions between Western powers and Russia over Ukraine led to a paring back of stock holdings in emerging Europe, which fell to a one-year-low of 0.5 percent, the poll, conducted between April 16 and April 28, found.

Investors also pulled money out of other developing markets, with holdings in emerging Asian stocks falling to 8.4 percent, the lowest level since at least June 2012, and Latin American stock holdings falling to 1 percent.

"We have reduced global equities in favour of absolute return given that the markets have become a tad more uncertain as geo-political worries about Ukraine, slowing Chinese economy and weaker US corporate earnings figures," said Lee Robertson, chief executive of Investment Quorum.

(Reporting By Jemima Kelly; Editing by Toby Chopra)

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