Fearful of a looming tumble in stocks and bonds from multi-year highs, global investors have increased the share of safe-haven cash in their portfolios to the highest levels in seven months, while also raising allocation to property.
But with Greece possibly headed for default and euro zone ejection, and the U.S. Federal Reserve likely to raise interest rates for the first time in nine years, many reckon an upset is inevitable. Those fears have only grown since investors were burnt by a month-long bond sell-off that saw German 10-year yields surge to 0.8 percent from close to zero.
The monthly Reuters survey of 44 fund managers and chief investment officers in the United States, Europe, Japan and Britain found the average recommended allocation to cash in global balanced portfolios rose one percentage point in May to 6.4 percent.
That is the highest since last November and a whisker below mid-2012 levels when the euro crisis was at its peak.
Conducted between May 18-28, the poll also found real estate allocations were upped to 2.1 percent of global portfolios, up from 1.8 percent last month and the highest since December 2014.
"We are in a positive environment for risk assets over the medium term, (but) over the next few months we anticipate volatility to remain at heightened levels," said Boris Willems, a strategist at UBS Global Asset Management, citing the U.S. interest rate uncertainty and Greece as risks.
"We therefore feel it is important to be tactical in our positioning in risk assets and keep powder dry to take advantage of opportunities arising from the increased volatility," Willems added.
The increase in cash came at the expense of equities, the share of which in global balanced portfolios slipped 1 percentage point to 49.5 percent, the lowest since January.
UK investors cut equity holdings to 48.9 percent, down from 54.3 percent in April and the lowest since August 2012, the survey found.
Bond weightings in global balanced portfolios were more or less steady at 36.6 percent.