Cash holdings of Australian investors have continued to decline, dropping to the lowest level since the inception of the bimonthly Australian Investor Sentiment Survey from the Australian Investors' Association (AIA) and FNArena in January 2011. At the same time, equities holdings have increased with the latest results matching the survey high point from March 2011.

Yet while increased equities holdings could be interpreted as being indicative of improving share market sentiment, the March 2013 survey shows nearer-term sentiment levels have actually come off with sentiment shifting to a more neutral footing on a six month horizon.

Only 35% of survey respondents indicated they were currently bullish equities versus 45% in January. 51% are presently neutral compared to 49% in January, while 14% now count themselves as bearish as opposed to 6% in the prior survey.

Many respondents talked of the need for a cautious approach towards investing in the stock market until global sovereign debt issues are resolved. Quite a few also indicated they do not expect a meaningful bull market in Australia without political change in Canberra.