(Reuters) - U.S. fund managers kept their global allocations roughly steady in May, as they wait for clearer signs on world growth and whether there will be follow-through in Congress on the U.S. administration’s policy proposals, a Reuters poll found.
Global equity allocations accounted for an average 55.6 percent from 55.4 percent in the previous month, with bonds at 35.3 percent versus 35.5 percent, according to the latest monthly poll of 13 fund managers.
U.S. stocks have see-sawed in recent weeks, held back by uncertainty surrounding Donald Trump’s presidency as well as concerns that the return of inflation, which once was at the forefront of investors’ minds, isn’t such a sure bet.
“The recent flare-up of Trump troubles and distractions is further depressing investor expectations of meaningful near-term policy initiatives including tax reform and infrastructure spending, and is effectively eating away at some of the post-election surge in animal spirits and the markets,” noted Alan Gayle, director of asset allocation and senior investment strategist at RidgeWorth Investments.
The Federal Reserve is widely expected to raise interest rates in June. However, recent U.S. economic data as well as the latest Fed minutes have helped to dial down some of the more hawkish policy expectations in the market.
Asset managers left their recommendations for cash, property and alternate investment holdings steady in May.
A further breakdown of regional allocations showed a cut to sterling-denominated assets ahead of the UK’s national election on June 8.
In recent weeks, Britain’s ruling Conservative party’s lead has narrowed and the latest projection by polling company YouGov showed the party will fall short of an overall majority. That pushed sterling lower on Wednesday.
Reporting by Shrutee Sarkar; Polling by Rahul Karunakar; Editing by Stephen Powell