Wednesday, February 17, 2016

The Move to Cash

The slump in the stock market has pushed many money mangers into holding good old-fashioned cash. Mutual funds surveyed by Bank of America Merrill Lynch now hold more cash as a percentage of their portfolios than they have at any time since 2001. Cash now accounts for 5.6 percent of the portfolios surveyed, mostly at the expense of stocks and high risk bonds.

The amount of stocks that these fund managers were holding relative to other assets, such as cash and bonds, dropped in early February to its lowest point since 2012. Overall, just 5 percent more respondents were overweight in stocks, compared with 21 percent that were overweight in January.

Cash allocation was nearly this strong last summer, when markets fell on concern over the ability of Greece to meet its debt payments and a sharp slide in Chinese stocks. The percentage of cash in fund portfolios reached 5.5 percent back then.

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