Fund managers hoard cash as coronavirus fear grips markets

Professional investors have rushed to cash amid the coronavirus market crash, and levels in their portfolios are the highest since the aftermath of the Sept 11 terrorist attacks in 2001.

Many fear that the impact of the virus on markets is far from over, according to a survey. The average manager now has 6pc of their portfolio in cash, up from 5pc in March.

The survey, from Bank of America Merrill Lynch, said the cash position now was significantly higher than the average of 4.6pc over the past decade.

The principal concern among fund managers is a second wave of the disease coming back after restrictions on movement are lifted, causing another market fall and a prolonged global recession.

Professional investors have hit “peak pessimism”, the bank said, and nine in 10 expected a global recession this year. More than half expected any subsequent recovery to be slow. Less than a quarter were optimistic of an immediate economic bounce once restrictions were lifted. On average, fund managers’ exposure to stocks was at its lowest since 2008.

As well as cash, there has also been a rise in the amount held in bonds. The most popular trade in the past month has been to buy US government bonds, the report said.

Britain remains out of favour and was among the most sold markets in the past month. Managers also withdrew money from European and emerging stock markets.

American and Japanese stocks were the only two to see an increase in buying. However, both countries’ currencies are viewed as “safe havens”, so buying them can be another sign of investors’ aversion to risk.