Scared investors flee to cash at highest levels since 2001

Wednesday, June 15, 2016
By Paul Martin

by Matt Egan
June 15, 2016

Nervous investors are hoping to ride out looming financial storms by staying in cash.

In recent weeks global fund managers have increased their cash stockpiles to the highest level since November 2001, the scary period right after the 9/11 terror attacks, according to a Bank of America Merrill Lynch survey.

“Investors have a mountain of cash,” Michael Hartnett, Bank of America’s chief investment strategist, wrote in a report.

The defensive maneuvering is a further sign that some investors are too scared to be stuck holding risky stocks and bonds ahead of potential upcoming shocks. The biggest fear among survey respondents is Brexit, the U.K. referendum on leaving the European Union taking place next week. Rising support in favor of dumping the EU has already begun to cause market turmoil in recent days.

Fund managers’ average cash allocation jumped to 5.7% this month, surpassing even the levels during the 2008 Wall Street meltdown or the 2011 U.S. debt ceiling debacle, BofA said. Hartnett noted other “big bear signals” as well, including investors displaying the lowest risk appetite in four years.

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