US is a winner as funds shift cash out of Europe

Investment funds are sniffing out risk to shift their money – and the US is the big winner as billions are switched around the world.

The shall-we-stay-or-shall-we-go debacle of the economy slipping up in Greece has led to many fund managers reassessing their investments – along with a string of important elections in key economies.

Socialist Francois Hollande winning in France, Putin’s problems in Russia and issues arising from votes in Spain and Greece have done nothing to quell the money men’s concerns for their cash.

To reveal the thinking of some of the more astute fund managers, the Association of Investment Companies (AIC) has looked at the changes in fund asset allocation over the past year.

France is the big loser, with European investment companies significantly reducing exposure

The US benefitted from a flood of incoming money, while the UK has also prospered from funds flowing in.

Companies increasing their exposure by 5% or more in the US during the past year included

  • Martin Currie Global Portfolio – up to 51% from 15% as managers changed investment objectives and benchmarks to stress a more global approach
  • JPMorgan Overseas – up to 32% from 20%
  • Milton Worldwide Growth – up to 20% from 13%
  • Polar Capital Technology – up to 70% from 64%
  • JPMorgan Elect Managed Growth – to 31% from 25%).

France is still licking her wounds after several investment companies took money off the table.

BlackRock Greater Europe decreased exposure from 29% to 15% and the European Investment trimmed investments from 21% down to 13%. Polar Capital Global Healthcare Growth & Income also moved cash out of France, with the fund going down from 8% a year ago to 3%.

AIC’s Annabel Brodie-Smith said: “As leaders prepare to gather for the G8 summit, it’s interesting to look at how asset allocation has changed over the last year. Many G8 countries have borne the brunt of the global financial crisis and there have been some significant asset allocation changes.”

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