Most fund managers expect a Greek default
Most major fund managers (57 percent) expect a credit event from Greece, whether the country stays in the eurozone or is forced to exit, according to a survey conducted earlier this month by Bank of America Merrill Lynch.
From the poll of 207 foreign fund managers, who manage a combined total of $562 billion, 42 percent expect a default by Greece but not a eurozone exit, while 15 percent foresee a Greek departure from the common currency. The remaining 43 percent believe there will be a bloodless solution to the crisis.
Notably, the poll was conducted during the first 10 days of June, before the crisis between Prime Minister Alexis Tsipras’s government and the country’s creditors reached last week’s severe levels, a fact which suggests the percentage of those expecting a credit event would be even higher now.
Few institutional investors have positioned themselves against the worst-case scenario for Greece. However, they have been selling stock internationally, reducing the risk in their investments andraising cash over the course of the last four weeks, according to the managing director and chief investment strategist at BofA Merrill Lynch, Michael Hartnett. Particularly in Europe, cash retained in the portfolios of institutional investors has reached its highest point since the height of the European crisis in March 2009.
