Japanese fund managers trimmed their model portfolios' exposure to equities in May, a Reuters poll found, in a month in which US political turmoil curtailed institutional investors' appetite for riskier assets. The survey of five Japan-based fund managers conducted between May 17 and 24 showed respondents on average wanted to allocate 38.1 percent of their model portfolios to stocks in May, from 39.1 percent in April.
Helped by strong corporate earnings, the S&P 500 rose to a record high in mid-May before sliding on strife that gripped Washington, building uncertainty over US President Donald Trump's political future amid reports he tried to quash a federal probe into alleged election meddling by Russia.
Still, US equities had recovered most of their losses towards the month's end, with their global peers following a similar pattern. Poll respondents increased North American stock exposure to 30.5 percent in May from 28.0 percent in April. They also raised their allocations to Japanese stocks to 46.3 percent from 43.8 percent, while cutting exposure to British stocks to 2.5 percent from 5.0 percent.
"Equities are expected to remain at high levels once excessive risk aversion runs its course," said Yuichi Kodama, chief economist at Meiji Yasuda Insurance. The respondents slightly increased their overall exposure to safe-haven bonds to 55.9 percent in May from 55.5 percent in April. Respondents increased euro zone bonds to 21.5 percent from 20.5 percent and trimmed Japanese bonds to 36.0 percent from 37.3 percent.
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