By Natsuko Waki
LONDON, April 30 (Reuters) - Global investors cut back on
stocks and bonds in April, lifting cash levels to a seven-month
high, on signs the world economy may be heading for softer
growth, Reuters polls showed.
Slower-than-expected growth data from China and the United
States over the past month, and a sluggish euro zone, have
prompted caution. However, fund managers in the monthly asset
allocation polls, released on Tuesday, showed no sign of panic.
They remained overweight stocks and underweight bonds and
cash overall, confident that central banks would keep providing
cheap financing and support economic growth.
"Most parts of the world economy have had a hit to growth
... However, the underlying strength of private sector domestic
demand is clearly still intact, while more central banks are
keeping policy easy," said Andrew Milligan, head of global
strategy at Standard Life Investments.
"So, in due course, we expect investor nervousness will die
The average cash positions of 57 leading investment houses
in the United States, Europe and Japan rose to 5.3 percent in
April, their highest since September, up from a two-year low of
4.1 percent last month.
Funds on aggregate cut their equity holdings to 49.6 percent
of their portfolios, a seven-month low, from 50.7 percent last
month. Bond allocation fell to 38.0 percent from 38.3 percent.
Alternatives, which include investments in commodities and
other assets, rose to 5.6 percent from 5.4 percent.
The survey was conducted between April 15 and 29, when
concerns about weaker global growth triggered a sell-off in oil
and other commodities.
However, beyond a temporary retreat to safe cash harbours,
investors are likely to stick to risky assets in the long term.
Twenty-five out of 28 respondents said the global growth
slowdown and dip in world stocks in April were a temporary lull.
World stocks, measured by MSCI, had only a
brief dip before hitting their highest level since June 2008 on
In a month which saw a broad decline in peripheral yields
especially in Spain and Italy, investors lifted allocation to
euro zone fixed income assets to 24.9 percent, the highest level
since May, from 23.7 percent in March.
Investors increased equity allocation to Japan - one of the
best-performing stock markets this year - to their highest since
July, at the expense of the euro zone and emerging Asia.
Many are confident about the prospect for Japan's economy.
Eighteen out of 23 said the Bank of Japan (BOJ) would be
successful in reflating the domestic economy.
"Early evidence suggests that both confidence and sales
momentum are improving in Japan and may be enough to jump-start
the moribund economy," said Alan Gayle, senior investment
strategist and director of asset allocation at Atlanta-based
EQUITIES, JAPAN BONDS CUT
U.S. global fund managers raised their cash holdings to 3.3
percent, while cutting equity allocations to 57.4 percent, their
lowest weighting since the financial crisis began in 2007.
Japanese fund managers cut their allocations for global
equities to a seven-month low of 39.8 percent in April, the
lowest level since September. Bond allocations ticked up instead
to 52.7 percent from 52.3 percent last month.
They also cut their weighting on Japanese bonds to a
16-month low after the BOJ's aggressive stimulus destabilised
the Japanese bond market.
European fund managers increased cash holdings to a
seven-month high of 7.3 percent while reducing their equity
holdings for a third straight month to 46.7 percent.
British investors lifted their exposure to cash for the
second month running, pushing the weighting to 5.8 percent.
Exposure to equities slipped for a second month, to 54.6
percent, following several months of increases.
For a table of poll results, click on
For stories on regional polls, click on
(Additional reporting by Chris Vellacott in London, Maria Pia
Quaglia in Milan, Rahul Karunakar and Snehasish Das in Bangalore
and Hideyuki Sano in Tokyo; Editing by Susan Fenton)
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