Many of the world's wealthiest investors remain traumatized by the losses they sustained during the financial crisis and are clutching on to safe, low-yielding assets rather than taking any risks. Wealth managers say that even after a 75 percent rise in world stocks since March, a lot of clients' money has yet to move. Investors have, in the words of one strategist, become "structurally risk averse."
That is prompting investment managers to seek creative ways to unleash funds held in safe cash positions, and may be the key to sustaining this year's rally in stocks and riskier assets.Managers are enticing clients with guarantees of investment capital or by offering other rewards to make losses less likely.
It is a phenomenon similar to that seen in 2002-03 when investors were reeling from the bursting of the internet stocks bubble. So some may even have been twice burned.How much is tied up is difficult to ascertain. Fund tracker EPFR Global reckons that some 94 percent of the net flows to U.S. money market funds it tracked in 2008 has already exited.
But going further back, it says U.S. money funds that report weekly took in a net $191 billion in 2007 as a whole. That suggests that the cash unwinding of the past two years is at most only two thirds through.
Reuters.com
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