Waning faith that the eurozone can extricate itself from its debt crisis has led British fund managers to hold their highest concentration of cash in at least two years.
As stocks no longer seem safe enough amid a steadily escalating crisis atmosphere, investment managers have dropped their stock holdings by more than a percentage point in December, with their cash holdings rising by the same amount. Those cash holdings stand at an average of 10.4%.
Reuters reported that managers are hoping for a better year in 2012, but apparently are not counting on it after a year beset with everything from natural disasters to political instability and continued financial woes. Chris Paine, associate director for asset allocation at Henderson Global Investors, was quoted saying, “One would hope there would not be as many ‘acts of God’ in 2012, but the potential for market upsets and systemic crises remains high.”
One of the top concerns of managers surveyed in the Reuters poll is, of course, the continuing debt crisis in the eurozone, with few having much confidence that it will be resolved or that the euro itself can survive as it is. The latest deal to emerge from a European Union summit meeting did little to restore that confidence.