Falling Oil Price Leading to Cash Demand

Despite the volatile swings in global equities, fund managers are still confident in stocks but the falling oil price is pushing them to add to their cash holdings, a leading industry survey has found.

Cash now makes up 5 percent of fund manager portfolios on average, according to fund managers polled by the Bank of America Merrill Lynch. Almost a third of those surveyed have hiked their cash positions and are now overweight relative to their benchmarks, as they close out commodity positions.

Some 36 percent of the 214 panelists surveyed for the bank’s monthly fund manager poll, who are collectively running $604 billion, now view oil as undervalued following its recent price crash.  This reading is up over 20 percentage points since October and reflects oil’s lowest level since 2009. Meanwhile, investors have bolstered their positions in European equities.


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