US fund managers slightly raised their holdings of bonds and cash from equities in October amid uncertainty about US growth, but still maintained a high exposure to stocks on the back of strong earnings, a Reuters poll shows.
A poll of 11 fund managers showed them allocating 67.1 percent of their money to equities, down from 68.2 percent in September's survey.
Bond exposure was slightly higher at 27.2 percent in October from 25.4 percent while cash allocation rose to 4.1 percent from 3.3 percent the previous month.
The results in October were skewed by a change in the sample, but on a like-for-like basis, the data still pointed to a slight shift into bonds and cash from equities.
Fund managers said volatile oil prices and weaker consumer confidence following Hurricanes Katrina and Rita remained a key risk to growth as the winter season approaches and was the main factor behind the small rise in bond and cash allocations.
But they still remained overweight equities and underweight bonds, a stance they expected to stick to over the next three months.
"Our outlook for the equity market is very positive," said Andrew Lane, product manager at Oppenheimer Capital in New York. "Earnings have been robust and there are signs of recovery in the tech sector particularly in IT infrastructure. The replacement cycle has also reached a point where companies need to think about capital spending again."
But the prospect of further US rate rises remained "a big dampener for bond markets", Lane said.
In theory, official rate rises make bonds less appealing and prompt investors to sell government debt which reduces prices and increases yields which move inversely to prices. Within equities, the survey showed fund managers remained overweight in energy and material stocks for now, but were more cautious in the longer-term.