This is not at all surprising, considering Europe’s fund buyers have consistently been telling us they will decrease their allocations to both bonds and equities if a Grexit appears likely.
During eleven of Expert Investor Europe’s investment fora across Europe held this spring, we asked delegates about their attitude towards the Greek drama.
While the share of delegates believing Greece will exit the eurozone varies wildly, from just 23% in the Netherlands to 53% in Denmark, it has remained quite constant between March and early June.
On average, one in three European fund buyers believe Greece will exit the eurozone and return to the drachme.
At the same time, more than four in 10 fund selectors think financial markets underestimate the seriousness of the Greek crisis, a percentage which is quite constant across Europe.
Until very recently, bond and equity markets had been shrugging off the recurring breakdowns of talks between Greece and its creditors.
We also asked fund selectors how they would adjust their portfolios if they deemed a Grexit likely.
Belying the market complacency of the past few months, four in 10 fund selectors answered they would reduce both their equity and bond holdings. Most of the rest said they would reduce either peripheral bonds or all government bonds.
Hedge or sell
Though, admittedly, we can’t say whether the share of Grexit-believers had increased dramatically during the past two weeks, it has probably not decreased.
All the fund selectors your reporter spoke to this week have adjusted their allocation following the increase of Grexit-rumours, while most have reduced their exposure to (European) equities or have started to hedge it.
“Concerns about Grexit contributed to our recent decision to reduce our equity exposure to a neutral level,” says José Luis Borges, head of institutional portfolios at BPI Gestao de Activos in Portugal.
Borges’ concerns are shared by Tristan Delaunay, CEO of Athymis Gestion, a Paris-based multi-manager boutique. But he has taken a slightly different approach.
