Global investors flocking toward the safety of cash have pushed the average global allocation back up to equal the highest allocation of the past 15 years, says the Bank of America Merrill Lynch’s monthly fund manager survey. The average cash allocation jumped to 5.8 per cent in October from 5.5 per cent the previous month. The other two times the average cash allocation was that high was in July following the UK’s vote to leave the European Union and in the fall of 2001. For 20 per cent, the biggest tail risk is seen to be a potential European Union breakup. The other most commonly cited tail risks were a bond market crash (18 per cent), a Republican victory in the U.S. presidential race (17 per cent), and U.S. inflation (12 per cent).
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