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Investment Managers Survey
Over the quarter, around a third of managers chose to reduce equity exposure, generally favouring corporate bonds and credit. Holding in government bonds, including linkers, remained broadly the same over the quarter, and unsurprisingly, overall duration remained unchanged. Around a third of managers elected to increase exposure to the US Dollar, while the Euro and Yen remained flat. For those managers holding alternative assets, we saw a slight increase in holdings in hedge funds, infrastructure and, to a lesser extent, private equity. Overall exposure to property remained unchanged over the period.
In terms of market sentiment, few managers reported that they were more optimistic this quarter versus last, with around a third saying they were becoming increasingly cautious. They cited increasing inflation expectations, central bank monetary tightening and supply-side disruptions as the highest threats to client portfolios. On the other hand, the risks of COVID related lockdowns and the emerging issues in the Chinese property sector were seen as less likely causes of further market disruption.