ABN Amro Increases Its Equity Holdings

The wealth management unit of ABN Amro Bank has raised its allocation in the equities to the highest level since 2009, after it was encouraged by the fund flows into asset class and also the market’s resilience to bad news. ABN Amro Bank, a renowned private bank has increased the share of money in the stocks from its previous value of 40% to 44%, as per as the investment outlook published for the 2nd quarter. ABN Amro has trimmed the holdings in its bonds from 45% to 44% and hedge funds to 5% from its previous value of 8%. Real estate is still at 5%, commodities are at 2%, whereas, cash is at zero.

The Chief Investment Officer of ABN Amro Private Banking, Didier Duret, stated that his company has continued to buy equities. He added that flows are now coming back and the investors are kind of resilient to the bad news. He cited example of Italy, where the bad news affected badly at initial level, however, things have sort of stabilized since then. According to Duret, the same thing will happen with Cyprus as well.

Till 14th March, investors have poured a total of $101.6 billion into the developed market equity mutual funds throughout the world, as far as the data released by the EPFR Global is concerned. Incidentally, on last week, the Standard & Poor’s 500 Index, the benchmark gauge of US reached within 1% of the record and European benchmark gauge Stoxx Europe 600 Index went to its highest level since June, 2008.

According to Duret, the investors are currently on a buy-on-the-dip mentality. He added that equities should go to a higher zone and can even break decisively the historical high on the benchmark gauge S&P 500 as well. Duret sees a viable opportunity, if the macro data continues to be supportive enough.

ABN Amro has been able to maintain the status of overweight in Asian and Brazilian equity markets. This means the company holds more of the stocks which are represented in the global benchmarks. ABN Amro’s position was reduced to neutral on the European shares 3 weeks earlier. It also went underweight on the Japanese and US market. On 6th September, 2012, the President of European Central Bank, Mario Draghi announced the unlimited asset purchase program and since then ABN Amro started to buy European equities.