Investors are repositioning portfolios as the United States moves closer to invading Iraq.
Credit Suisse Asset Management has been "making smaller bets and taking less risk in asset allocation because of the uncertainty," said Steven Bleiberg, chairman of the global equity strategy group. In equities, CSAM has been overweighting emerging markets and Australia. He's underweighting Japan, Europe and the United Kingdom, and modestly overweighting the United States.
The Boston Co. has reduced weightings in the energy sector, in light of a pending war, said Valerie Sill, head of the equity policy group. "We felt the war premium was built into commodities. ... We had been overweighting the group for the last 18 months and now we're neutral to our benchmark."
At the same time, Ms. Sill said tech holdings were bumped up, adding to positions in Intel Corp. and Nokia Corp. because she thinks their earnings are at a trough and the companies are attractively valued.
But Mark Yusko, president of the UNC Management Co., which runs the University of North Carolina at Chapel Hill's $1 billion endowment, said: "War risk makes you want to be more defensive. Defense stocks could be attractive if we go to war. And energy companies will be potential opportunities with good access to non-Gulf related resources. If there is a war, there will be a flight to safety. People will buy Treasuries and gold," he predicted.
"We increased our exposure to the Goldman Sachs Commodity index product because of the war threat and the strike in Venezuela," he said.