“Cash is something that, as you know, with inflation is going to hurt you in the long term,” Kapito said in an interview today with Tom Keene, Sara Eisen and Scarlet Fu on “Bloomberg Surveillance.” “People are not getting it and they’re not putting enough money away.”
A survey commissioned by BlackRock showed U.S. investors held more than 60 percent of their savings in cash or cash-like investments including money-market funds and certificates of deposit. Respondents held just 18 percent in stocks. The survey, conducted by London-based 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.
Kapito and Chief Executive Officer Laurence D. Fink, co-founders of New York-based BlackRock, have urged investors for more than a year to get out of cash and into stocks. With U.S. stocks trading near record highs, some investors are becoming more cautious. 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.
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.” Fink, who last year said he would invest 100 percent 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.
Weitz, manager of the $1.1 Weitz Value Fund, held 29 percent of assets in cash and Treasury bills as of Sept 30. 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 Einhorn signaled in a conference call yesterday he was 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. (GLRE), the Cayman Islands-based reinsurer where Einhorn oversees investments and serves as chairman. That’s down from about 42 percentage points three months earlier.
Mutual-fund investors have this year heeded the advice to buy equities. Stock funds in the U.S. attracted about $127 billion while bond funds lost about $34 billion to withdrawals as of Oct. 23, according to data compiled by the Investment Company Institute.
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