Analysis: Investors are repeating the "abandoning stocks and bonds, hoarding cash" strategy seen in 2022, indicating a rise in risk aversion.

To mitigate the risks of a potential war with Iran, investors are selling off stocks and bonds and increasing their cash holdings, a strategy mirroring that employed by Russia after its 2022 invasion of Ukraine. A recent Bank of America survey of fund managers this month showed the largest jump in cash holdings in six years. Meanwhile, JPMorgan strategists said this week that the portfolio adjustments made in response to the conflict may be far from over. A report from the JPMorgan team, led by Nicholas Panigizoglou, stated that as long as geopolitical and macroeconomic uncertainty remains high, current below-historic cash allocations will negatively impact future stock and bond markets. Investors have been simultaneously selling stocks, bonds, and gold, favoring cash holdings. However, compared to the levels seen at the outbreak of the Russia-Ukraine conflict, cash levels in portfolios remain moderate. (Jinshi)