Global sovereign funds intend to cut holdings of shares

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Global sovereign funds intend to cut holdings of shares

10/7/2018 12:00 am    LONDON (Reuters) -  More than a third of sovereign wealth funds plan to reduce their exposure to stocks over the next three years after a strong performance in 2017, a study by asset management firm Envisco showed, describing trade wars, geopolitical conditions and high ratings as counterproductive.  The report, based on meetings with 126 sovereign investors and central bank reserve managers with assets of $ 17 trillion, concluded that stocks outperformed bonds to become the largest asset class in the portfolio with an average of 33 percent, up from 29 percent in 2017.  The shares are overweight In the portfolios of about half of the sovereign funds at the moment, but 40% of them expressed satisfaction with the situation and 35% intend to reduce its exposure to stocks in the medium term, according to ENVSCO. The interviews were conducted from January to March, a season characterized by global stock volatility and some investors believe they are still subject to correction.  A major concern is the possibility of a trade war, geopolitical risks and the fact that stock valuations are high on either an absolute or relative basis.  Since March, the United States has stepped up trade disputes with China and other major trading partners, prompting global stocks to fall.  Investors fear that the exchange of customs duties in exporting countries will hurt and hinder global economic growth.