By Tushar Goenka

BENGALURU (Reuters] – A Reuters poll revealed that global fund managers kept a prudent stance in March. The increased recommendation for bond holdings and cash reserves suggested a decreased equities exposure.

These defensive strategies were adopted by fund managers following the Russia-Ukraine War. While the February survey was not taken prior to Russia’s invasion of Ukraine on February 24, 2002, it did indicate caution.

The average recommended equity allocation was 48.5% in the global model portfolio, which includes 35 chief investment officers from the United States, Europe, and Japan. This is the lowest level since the end of 2020. In February, it was 49.5%.

Speculations that the U.S. Federal Reserve will raise interest rates aggressively has caused equity markets to suffer.

The market has seen a rapid rebound since March 8th, when it was experiencing its largest 15-day percentage increase since June 2020. This occurred as the market recovered from the steep sell-off that took place near the beginning of the COVID-19 pandemic.

Asset managers increased their cash buffer by 4.5% over the previous month. It was the largest increase since November 2020.

Craig Hoyda is a senior quantitative analyst with abrdn. “We believe that the markets are very close to pricing under our central scenario,” he said.

We see risks as being skewed towards the downside with the possibility of global recession in the next 2 years at 20%-30%.

On Tuesday, the spread between U.S. 10-year Treasuries and 2-year Treasuries showed signs of recession. It briefly inverted but then turned positive.

When this inversion continues, it can be used to predict recession.

Due to the fact that inflation has risen to multiple-year highs in almost every major economy, not all fund managers were equally cautious.

“In an inflationary environment, equities are the only large and liquid asset class accessible to all that can generate significant real returns,” said Christopher Rossbach, chief investment officer at J. Stern & Co.

(Reporting and polling by TusharGoenka and Arsh Mogre, BENGALURU; Fumika Inoue and TOKYO; editing and transcription by Barbara Lewis