By Sam Forgione
NEW YORK | Wed Feb 29, 2012 9:39am EST
(Reuters) – U.S. money managers increased their equity holdings in February to the second highest level in 14 months, tracking a rally in the S&P 500 stock index, a Reuters poll showed on Wednesday.
The poll, which surveyed 13 U.S.-based fund management companies between February 17 and 28, found that firms allocated 65.6 percent of their assets into equities, a gain of nearly 3 percentage points since January.
February’s equity allocation figure is only exceeded over a 14-month period by 66.8 percent in December.
The benchmark S&P 500 – which has risen 3.5 percent in February and on Tuesday closed above the May 2011 intraday high of 1,370.58 points – is up more than 9 percent this year. Also on Tuesday, the Dow Jones Industrial Average closed above 13,000 for the first time since 2008.
Risk has made a huge comeback this year on signs of improvement in the U.S. economy, including job growth, manufacturing and consumer confidence, as well as an attractive risk-reward ratio on equities relative to other asset classes.
“There’s almost a crisis fatigue, and cash has been on the sidelines for such a long period of time and people want to have a better return than the 1.98 they get on the 10-year Treasury. They’re looking for more,” said Colleen Denzler, senior vice president and head of fixed income strategy for Janus Capital Group.
“So if there’s any chance that clarity and consistency is around the corner, they’re going to reach for high yield, they’re going to reach for equities, and that’s what we’ve seen since January.”
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