Having hit 4.7% in December, average cash balances dipped to 4.4% in January, the lowest level since March 2013 and below the 10-year average of 4.5%. At the same time, January’s net 55% of managers adopting an overweight in equities is the highest in two years as managers pushed back worries about when stock markets will peak.
According to the survey, a majority of investors (30%) now expect a peak in equity markets in 2019 or beyond, pushing back the timing by two quarters from last month’s survey, when the majority expected it to peak in the second quarter of this year. This may go some way to explain why investors in January were at their most overweight in equities relative to government bonds since August 2014.
“Investors continue to favour equities,” said Michael Hartnett, chief investment strategist. “By the end of Q1, we expect peak positioning to combine with peak profits and policy to create a spike in volatility.”
In terms of positioning, from a regional perspective managers said the eurozone, emerging markets and Japan were the three areas they most wanted to be overweight. The UK remains deeply out of consensus, with those wanting to underweight it falling to levels last seen in 2001.
From a sector view, January saw a rotation into cyclical plays and out of defensive areas, with technology seeing its largest monthly rise since July 2014.
Some 213 panellists with $591bn of assets under management took place in the survey, which was conducted between 5-11 January.
