Global funds favour bonds over stocks on surging coronavirus infections: Reuters poll

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BENGALURU: Global funds recommended cutting equity holdings in July to the lowest in four years and suggested keeping bond allocations unchanged ...

BENGALURU: Global funds recommended cutting equity holdings in July to the lowest in four years and suggested keeping bond allocations unchanged from June, amid worries the coronavirus pandemic is hobbling a nascent economy recovery, a Reuters poll of showed.

The Reuters July 15-30 asset allocation poll of 35 wealth managers and chief investment officers in Europe, the United States, Britain, and Japan showed for the second consecutive month recommended allocations to equities was lower than bonds in the global balanced model portfolio. The poll showed a recommended cut to equity allocations to average 43.9per cent in the global balanced model portfolio from 44.2per cent last month, the lowest since July 2016. Overall equity exposure is down 5.8 percentage points from the beginning of the year.

"As central bank action reins in spreads we may shift our highest conviction overweight from high quality corporate bonds into higher yielding bonds where risk adjusted returns may be more attractive if default rates are contained," said Craig Hoyda, senior quantitative analyst at Aberdeen Standard Investments in Edinburgh.

 

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