U.S. funds favor equities
on hopes of fiscal stimulus: Reuters poll
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[November 30, 2016]
By Krishna Eluri
(Reuters) -
U.S.
funds increased equity allocations to a 16-month high in November on
expectations that fiscal stimulus from President-elect Donald Trump will
boost stocks, a Reuters poll found.
U.S. stocks have risen sharply since Trump's shock election victory
earlier this month - Wall Street's four main equity indexes hit record
highs last week.
The survey of 13 fund managers, conducted Nov 16-29, showed equity
allocations in a model global portfolio rose to 52.8 percent from 51.3
percent, the highest since July 2015.
That marked a shift as funds had kept portfolios largely steady over the
past few months.
So far, allocations to bonds, cash and property are little changed. The
only notable adjustment was a suggested cut in alternative investments,
which were in favor over the past year or so.
"We continue to favor equities over bonds, particularly in the wake of
the surprise election results. We anticipate an increase in fiscal
stimulus in the form of tax cuts, infrastructure spending and reduced
regulation," said Alan Gayle, director of asset allocation at RidgeWorth
Investments.
"We had an allocation to gold in the alternative space and while that
worked very well for us since late January, it was faltering. We sharply
trimmed our exposure to gold and moved that into equities."
Although there has been a sharp sell-off in major government bond
markets, bond allocations were up slightly at 35.8 percent of the
portfolio this month compared to 35.6 percent in October.
Yields on U.S. benchmark 10-year notes hit 2.417 percent last week,
compared to about 1.80 percent before Trump's election on Nov. 8.
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A trader works on the floor of the New York Stock Exchange (NYSE)
the morning after the U.S. presidential election in New York City,
U.S., November 9, 2016. REUTERS/Brendan McDermid
The dollar index has also surged to a more than 13-year peak, in
part on greater certainty about a Federal Reserve interest rate hike in
December and more to come next year.
"We continue to believe the best risk/reward opportunities remain in the
U.S., despite the recent increases in bond yields," RidgeWorth's Gayle
added.
(Polling by Sarmista Sen and Vartika Sahu; Editing by Andrew Heavens)
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