[Global Fund Manager Status and Investment Sentiment Changes]

1. Global Cash Holdings Status
   • A recent Bank of America survey revealed that global fund managers are holding cash at 3.5%, the lowest level since 2010.
   • Given the benchmark that cash holdings below 4% signal a sell signal and above 5% a buy signal, this indicates that global investors are currently taking an aggressive position.

2. Managers' Asset Allocation and Outlook
   • Of the 205 fund managers surveyed, 34% expect global equities to yield the highest returns this year.
   • Simultaneously, 11% indicated an intention to reduce bond holdings, increasing allocation to Eurozone equities, bonds, and defensive sectors while reducing holdings in technology and banking stocks.
   • Investor sentiment reflects a bullish outlook on equities driven by expectations of US interest rate cuts and robust economic growth forecasts. However, 89% of investors believe that US equities are overvalued, indicating underlying concerns.

[Comparison with Buffett's Cash Strategy]

1. Buffett and Berkshire Hathaway's Actions
   • Amidst Warren Buffett's strategy of selling stocks and increasing cash, Berkshire Hathaway further sold approximately $6 billion worth of stocks in the fourth quarter of last year.
   • Already holding approximately $325 billion (468 trillion won) in cash as of the end of September, Berkshire appears to have adjusted its position in the highly valued US stock market, judging the market to be overvalued.

2. Significance of Cash Holding Strategy
   • Buffett's accumulation of cash is interpreted as a measure to prepare for market uncertainty and to respond quickly to emerging opportunities.
   • Conversely, global fund managers are employing a strategy focused primarily on equities with reduced cash holdings. It remains to be seen who will achieve better results this year.

[Market and Investor Sentiment Indicators]

1. Rising Investor Sentiment Index
   • According to Bank of America's survey, the investor sentiment index, including equity allocation and global economic growth predictions, rose from 6.1 in January to 6.4 in February.
   • This reflects increased overall market confidence, but simultaneously reveals concerns about the overvaluation of US equities and global risk factors.

2. Risk Factors and Major Downside Factors
   • Fund managers cited the global trade war as a major factor contributing to a decline in risky assets. Other factors included rising bond yields and the Federal Reserve's interest rate hikes.
   • It is noteworthy that gold was rated as the most profitable asset as a hedge against the trade war.

[Key Points for Investors to Note]

• Cash Ratio and Trading Signals
▪ Remember that according to Bank of America, cash holdings below 4% generate a sell signal, while above 5% indicate a buy signal.
▪ The record-low cash holdings of global fund managers suggest the need to reconsider strategies in anticipation of increased market volatility.

• Allocation Strategies for Each Asset Class
▪ Given the high expectations for global equities this year, it is necessary to be sensitive to market trends.
▪ Simultaneously, considering risk management through portfolio diversification strategies such as reducing holdings in technology and banking stocks is a wise choice.

• Comparison with Buffett's Strategy
▪ Warren Buffett and Berkshire Hathaway's strategy of accumulating cash can be seen as a signal of adjustment due to market overvaluation.
▪ Conversely, fund managers maintain an aggressive investment stance amidst strong buying sentiment, necessitating the development of strategies tailored to individual investor preferences.

In summary, while global investors are employing aggressive, equity-focused strategies with low cash holdings, it is noteworthy that some large investors, such as Buffett, are increasing their cash positions to prepare for market uncertainty. Considering the strong buying sentiment in the market, along with concerns about overvaluation and various risk factors, it seems to be a time when a prudent investment strategy is essential.

*Source URL:
https://www.hankyung.com/article/202502194251i