Investors still favor cash, BlackRock's Kapito says

Most still largely on the sidelines five years after the financial crisis

Nov 1, 2013 @ 3:15 pm

+ Zoom

BlackRock Inc. President Robert Kapito said investors are still largely in cash five years after the financial crisis.

“Cash is something that, as you know, with inflation is going to hurt you in the long term,” Mr. Kapito said Friday. “People are not getting it and they're not putting enough money away.”

A survey commissioned by BlackRock showed U.S. investors hold more than 60% of their savings in cash or cash-like investments including money market funds and certificates of deposit. Respondents held just 18% in stocks. The survey, conducted by Cicero Group, polled 4,000 people in the U.S., most of whom had an annual income below $45,000, from Aug. 24 to Sept. 16.

Mr. Kapito and chief executive Laurence D. Fink, co-founders of BlackRock, have urged investors for more than a year to get out of cash and into stocks. But with U.S. stocks trading near record highs, some investors are becoming more cautious. Mr. Fink this week said he's seeing “bubble-like markets” again, and top fund managers from Wally Weitz to Donald Yacktman and David Einhorn have said they're holding more cash.

'BUBBLE-LIKE MARKETS'

Mr. Fink on Oct. 29 said the Federal Reserve should begin pulling back on its stimulus program of buying bonds because it was contributing to “bubble-like markets.” Mr. Fink, who last year said he would invest 100% of his personal wealth in equities, signaled more caution after the recent debt debate in Washington shut down the government for more than two weeks and brought the country close to its legal borrowing limit.

Mr. Weitz, manager of the $1.1 Weitz Value Fund, held 29 percent of assets in cash and Treasury bills as of Sept 30. Mr. Yacktman has pushed the level of cash in his $11.4 billion Yacktman Focused Fund to 21 percent as of Sept. 30, from 1.4 percent at the end of 2008.

Hedge fund manager Mr. Einhorn signaled in a conference call Thursday that he is taking a more conservative approach. Long positions, which gain on rising asset prices, exceeded short bets by 35 percentage points as of Sept. 30 at Greenlight Capital Re Ltd., the reinsurer where Mr. Einhorn oversees investments and serves as chairman. That's down from about 42 percentage points three months earlier.

Mutual fund investors this year have heeded the advice to buy equities. Year-to-date as of Oct. 23, stock funds in the U.S. attracted about $127 billion, while bond funds lost about $34 billion to withdrawals, according to data compiled by the Investment Company Institute.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Schwab's Jon Beatty: How independent firms are winning high-net-worth clients

Independent advisers have a distinct advantage when it comes to acquiring new clients, according to Schwab's latest RIA Benchmarking Study. Jon Beatty, senior vice president at Schwab Advisor Services, discusses the findings.

Latest news & opinion

More advisers disapprove of Trump job performance at six-month mark

More than half of respondents to InvestmentNews poll say their confidence has dropped since start of term. Supporters give him partial credit for market uptick.

Fidelity taps Goldman Sachs to expand lending services through RIAs

Streamlined non-purpose loans use investment portfolios as collateral.

Jay Clayton says SEC, DOL can give market 'clarity' on fiduciary rule

Chief regulator is confident two agencies could reach 'common ground' on an investment advice standard across all accounts.

Sen. Gary Peters brings broker background to work every day on Capitol Hill

Michigan Democrat resists ripping up DOL fiduciary rule but would be open to some changes.

DOL fiduciary rule causing DC-plan record keepers to change business with insurance agents

Principal has communicated that independent agents must change their business models to keep receiving compensation.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print