US money managers showed their strongest demand in more than a year for euro zone debt in March, a sign that concerns about the European crisis may be ebbing. A Reuters poll of 14 US-based fund management companies released on Thursday revealed the firms allocated 20.6 percent of their global bond investments to the euro zone, a 15-month high.
Those same firms, which were surveyed between March 20 and 28, decreased their US and Canadian bond holdings to an average of 57.4 percent, the smallest percentage in the last 15 months.
US bonds are overpriced compared with the rest of the world right now, said Christopher Brown, chief investment officer of Pax World Funds. He added that the euro zone's bond market is attractive for its high yields.
Risk has made a huge comeback this year on signs of improvement in the US economy, including job growth, and investors' appetite for yield continues due to the Federal Reserve's accommodative stance. This week, Fed Chairman Ben Bernanke signalled that a supportive monetary policy will stay in place even as the US unemployment rate improves.
Investors' willingness to go out along the risk curve has also been whetted by the easing crisis in the euro zone.
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