Funds cut euro zone debt in April-Reuters poll

By Jeremy Gaunt, European Investment Correspondent

LONDON, April 29 (BestGrowthStock) – The Greek debt crisis has
prompted global investors to cut back on their holdings of euro
zone government bonds, although no such flight has yet to occur
with the region’s stocks, Reuters polls showed on Thursday.

Surveys of leading investors in the United States,
continental Europe, Britain and Japan showed a general pull back
from equities in favour of bonds in April, in line with other
survey’s showing increased risk aversion.

Overall, 48 firms cut the average equity holding in their
balanced portfolios to 52.8 percent from 53.5 percent a month
earlier. Bonds rose to 35.5 percent from 34.5 percent and cash
increased to 4.7 percent from 4.5 percent. [ASSET/WRAP]

The polling mostly took place before this week’s downgrades
of Greek, Portuguese and Spanish sovereign debt, but were still
reflective of the tensions in markets during the month over the
exploding euro zone debt crisis.

Holdings of euro zone government debt fell to 38.4 percent
of bond portfolios from 39.5 percent in March. In January,
holdings of euro zone bonds were above 42 percent.

“The debt crisis is a stark reminder that there remains
lingering problems from the financial crisis that must be
monitored carefully,” said David Joy, chief market strategist at
U.S. firm RiverSource Investments.

Despite this, euro zone stock holdings rose slightly in the
month, suggesting that fears among longer-term investors have
not yet spread to all European assets.

The overall fall in equity holdings, meanwhile, reflected
concerns among investors that the more than year-long stock
market rally, which has seen MSCI’s all-country world stock
index rise nearly 85 percent, is due for a correction
( ).

“Low volatility and the recent, steady rise of equity
markets raises the possibility of a large sell-off following
what seems to be innocuous news flow. We believe the most likely
risk lies on the downside,” said Chris Paine, fund manager at
Henderson Global Investors.

Investors in Britain, Japan and continental Europe all cut
their stock holdings. U.S. investors, however, were more
bullish, focusing on signs of economic growth and good corporate

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U.S. fund managers increased their exposure to equities in
the month and decreased bond allocations.

The 12 U.S.-based management firms held an average of 65.2
percent of assets in equities, compared with 64.6 percent a
month earlier.

The poll showed managers decreased fixed-income holdings to
an average of 29.5 percent, from a 30.0 percent average in
March. The average cash allocations remained the same for both
March and April at 1.7 percent. [US/POLL]

Continental European investors lifted cash to an 11-month

The poll of 14 Europe-based asset management companies
showed a typical mixed portfolio holding 47.5 percent of its
assets in equities, down from 48.0 percent in March.

The allocation to bonds — which includes government bonds
and corporate debt — rose marginally to 39.7 percent this month
from 39.3 percent in the previous month.

Cash increased to 6.9 percent from 6.7 percent — the
highest level since last May when it stood at 7.1 percent.

Japanese fund managers cut their weighting for stocks to a
seven-year low and raised their bond weightings in their model

The average share weighting in the poll, which was released
on Wednesday due a Japanese holiday, fell to 44.8 percent — the
lowest level since February 2003 — from 46.5 percent in March.

The average bond weighting climbed to a 10-month high of
49.1 percent, up from 47.6 percent in March. [JP/ASSET]

British fund managers continued to reduce exposure to
equities in favour of bonds.

The survey of 11 fund managers showed allocations to
equities in global balanced portfolios reduced to 53.5 percent
on average from 55 percent a month earlier.

Exposure to bonds climbed to 23.6 percent from 21 percent
while managers also increased cash reserves to 7.1 percent from
6.5 percent. [GB/ASSET]

Stock Analysis
(Additional reporting by Jennifer Ablan in New York, Claire
Milhench and Chris Vellacott in London, Akiko Takeda in Tokyo
and Bangalore Polling Unit)

Funds cut euro zone debt in April-Reuters poll