They say equities are currently climbing the wall of worry. The results of FNArena & AIA's Investor Sentiment Survey in May certainly fit in with this framework. Respondents have grown increasingly cautious and lifted the cash component in their portfolio. But isn't everybody waiting for the correction? The Survey paints a picture of a large group of investors who has gone silent on the sidelines, warily observing what is next to come, while worrying about momentum in the domestic economy post the first Abbott-Hockey budget and a potential correction in China's property market. Optimism is now back at levels last recorded in late 2012. For the results: (VIEW LINK)
James, The highest cash balance was at 26% in Sep 2011. Over the past 1.5 years the cash portion has remained between 18-20%. Unfortunately, we do not have references pre-GFC (as we only started this survey in 2011) but I am confident cash levels would have been a lot lower in those days. I still think 20% cash is a lot and probably reflective of the cautious mindset of investors post-GFC. We haven't seen this lower than 18% as yet, and that's a telling stat too, in my opinion.
Rudi, some interesting trends in the results. Thanks for sharing and writing up the results. Out of interest from the historical surveys it doesn't look like the cash balances vary too much? Have you seen periods where cash balances fluctuate dramatically from this survey?