German institutions have decreased their asset allocation to European stocks from an aggregate 27% to 19% over the last two years, according to a survey by US-based consultants, Greenwich Associates.
Beneficiaries of the move away from equities have been bonds and cash. Bond allocations have risen 55% to 60% and cash holdings have increased form 4% to 9% over the past two years.
Despite this, the majority of the German institutions interviewed expect to cut their cash holdings in favour of European and non-European bonds, real estate and alternative investments.
Alongside decreases in equity holdings, changes in equity management strategy are expected in the future.
Twice as many of the 203 sponsors and asset managers interviewed expect their allocation to active European equities to fall by 2004 as expect them to rise, due to a shift towards passive investing.
The survey also revealed the number of external managers being used by institutions is decreasing marginally from well above 6 to an average 5.8.