U.S. fund managers increase stock holdings in November

November 30
2:16 PM 2013

U.S. fund managers increased their holdings of stocks in November, riding a global stock market rally that began when the Federal Reserve put off reducing its monetary stimulus, a Reuters poll showed Friday.

The survey of 12 asset management firms conducted Nov 18-27 found that equity holdings in global model portfolios rose to 56.4 percent of assets, from 55.9 percent in October.

It was the first increase in stock holdings since August. But the average equity stake remains about 10 percentage points below the 64.7 percent of portfolios that were invested in stocks at the beginning of the year.

Global stocks are being pushed higher by a widespread belief the Fed will not slow its $85 billion of monthly purchases of Treasuries and mortgage-backed securities until next year, probably not until March.

The benchmark S&P 500 has jumped more than 26 percent for the year, while the Euro Stoxx 50 index of blue-chip European stocks is up nearly 12 percent for the year. The MSCI All-World index, a measure of stock performance worldwide, gained nearly 1 percent in November.

"We have a constructive global growth picture amid a maturing business cycle going into 2014," said Douglas Gordon, senior investment strategist, North America at Russell Investments. "Risks include a surprise from either a communication misstep on behalf of the FOMC, or an earlier start to the taper than consensus, which currently is rapidly moving into 2014 - March or potentially later."

Fund managers said that they were encouraged by regular signs that the U.S. economy is improving. A recovery in Europe, supported by another European Central Bank interest rate cut this month, is also encouraging.

"I'm cheered that it looks like things are improving in Europe," said Alan Gayle, a portfolio manager at RidgeWorth Investments who oversees more than $400 million in assets.

Gayle, who has been moving more of his portfolio into stocks in developed European countries, also has an overweight weighting for U.S. stocks.

Overall, fund managers increased their holdings of emerging European stocks by 0.5 percentage points, the largest gain of any category. Holdings of U.S. stocks remained steady at 67.4 percent of equity assets.

The average allotment to fixed income fell slightly to 35.1 percent of assets from 35.6 percent the month before.

The largest decrease came in bonds issued in the U.S. and Canada, which fell to 64.8 percent of bond portfolios from 66.6 percent the month before.

Holdings of euro-zone bonds rose to 13.4 percent from 12.7 percent the month before.

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