funds cut recommended equity allocations in February:
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[February 29, 2016]
(Reuters) - U.S.-based fund managers
cut their equity holdings in February and boosted cash to a nine-month
high on persistent worries about a global economic slowdown, a Reuters
poll found on Monday.
Sharp market fluctuations have left many investors on the defensive.
The volatility is based partly on worries that growth is slowing
sharply in China where authorities cut the amount of cash banks must
hold in reserve for the fifth time in a year on Monday.
U.S. fund managers have steadily cut recommendations for stocks and
increased allocations for bonds since the beginning of last year.
The latest poll of 11 U.S. money managers showed recommended stock
holdings in a model portfolio fell again in February, to 51.9
percent from 52.5 percent. They are down almost four percentage
points from a year ago.
"We lowered our equity weighting from overweight to neutral
reflecting the persistent headwinds from the softer global economy,
stronger dollar, and weak oil prices on corporate earnings," said
Alan Gayle, senior investment strategist at RidgeWorth Investments.
Recommended bond holdings were barely changed at 37.2 percent
compared with 37.3 percent. That figure is up almost three
percentage points from a year ago.
Cash holdings increased to the highest since May to 4.4 percent from
4.0 percent in the previous month.
Regional breakdowns showed an increase in allocations for North
American assets at the expense of emerging markets.
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"Risk remains high in emerging markets due to weak commodity prices,
the strong dollar, and the large amount of dollar-denominated debt
outstanding in many of these countries," said Jeff Layman, chief
investment officer at BKD Wealth Advisors.
In the fixed-income portfolio, fund managers increased North
American bond allocation recommendations to 71.8 percent in February
from 69.9 percent in January.
"We continue to believe that the U.S. represents the best
risk/reward opportunities in what has become a challenging
environment for bonds due to persistent and experimental central
bank monetary policies," said Gayle at RidgeWorth.
(Reporting by Rahul Karunakar; Polling by Aara Ramesh and Sujith Pai;
editing by John Stonestreet)
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