The world's top investors lifted cash holdings this month to their highest since July 2012 and pruned equities, seeking to cut risk at the end of a volatile quarter, a Reuters poll shows. The monthly polls covering 51 leading investment houses in the United States, Japan and Europe showed cash holdings rose to 6.6 percent from 6.2 percent in February.
Bond holdings rose to 36.3 percent, matching November levels, while equity weightings fell to 50.2 percent, levels not seen since July.
The poll was taken between March 12 and 28, when escalating tensions between the West and Russia over the annexation of Crimea spooked equity markets, especially after a recent rally had taken indexes such as S&P 500 to record highs.
"With equity markets now fully valued they need a continual flow of good news to maintain their upward momentum," said Robert Pemberton, investment director at asset manager HFM Columbus.
"But they are now encountering some headwinds - be they geopolitical, such as Ukraine, or more fundamental, such as disappointing growth or corporate earnings numbers."
The benchmark MSCI world equity index is flat on the year, as February's rally offset a sharp decline in January. The index rose 20 percent last year.
Within equities, investors boosted euro zone holdings for four months in a row to 19.0 percent, the highest level since June 2011.
The respondents lifted equity weightings in both emerging Europe and Asia, in a sign that they are increasingly attracted to cheap valuations after a recent sell-off.
Investors allocated less than half of their fixed income portfolios to government bonds for the first time since October. They increased the proportion of high yield bonds to 13.4 percent from 12.8.
"We keep our overweight in high-yield bonds and selected sovereign markets such as Italy, UK and Australia," said Boris Willems, strategist at UBS Global Asset Management in Zurich.
Italian 10-year government bond prices have surged in recent weeks, sending yields to 8-1/2 year lows of 3.261 percent on Friday as recovering peripheral economies attracted investors.
US-based fund managers cut their average stock holdings to a five-month low and held their highest average position in cash since December.
European fund managers lifted cash levels to a 1-1/2 year high and cut equity holdings. Holdings of both European bonds and equities hit their highest levels in more than three years.
British investors cut equity holdings to a 15-month low and allocated more to bonds than they had since May.
Japanese fund managers increased fixed income assets in their portfolios to the highest since November while equity allocations dropped from last month's 2-1/2 year high.
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