Monitoring where moderate allocation funds are putting their money gives an indication of whether fund managers are being more conservative or aggressive this week.
We track two separate indicators:
- Top 3 Moderate Allocation Funds
- Aggregation of all Moderate Allocation Funds
This is calculated weekly and covers the last one year
We have seen a pretty dramatic uptick in funds' exposure to equities – indicating that risk appetite is returning and stocks are back in favor. Compared with last week's market sentiment haunted by uncertainties from the Irish debt crisis and fears of a possible rate hike coming out of China, there is a shift in interest to equities. Ireland last week expressed its willingness to accept aid. China did not deliver an expected 75 basis point increase in the main interest rate that had been the talk of last week’s session. The U.S. market jumped following General Motors' (GM) successful IPO, which reinforced investor confidence in a broad economic recovery.
We have seen a similar trend in all Moderate Allocation Funds in that portfolios continue to become more aggressive and are increasing their exposure to equities.
Although the full impact of the Ireland’s debt crisis and its effect on the equity markets remain to be seen, for now the funds tracked by MyPlanIQ have demonstrated increasing risk appetite and remain cautiously optimistic about the prospects of a sustained economic recovery.
Disclosure: No positions