US institutional investors recommended reducing stocks holdings and increasing bond allocations in March even as the Dow Jones industrial average passed an all-time high, judging risks to this year's bullish run have grown. The average equity allocation in a model global portfolio fell to 60 percent in March, a three-month low, from 62.3 percent in February, according to Reuters' monthly survey of US-based fund management companies.
Average fixed-income allocation in March rose to 34.6 percent, up from 32.1 percent the month before and the highest since December. Government bonds, at the expense of investment grade and high-yielding bonds, got a high recommendation. Some investors said that the cutbacks in equities came in part because they expected stock prices to slide after the market's strong first quarter performance. The US economy, however, is showing signs of steady improvement at a time when Europe and Japan are struggling.
The Standard and Poor's 500 index is up approximately 9.6 percent for the year through March 27, while the Dow Jones industrial average has gained 10.9 percent over the same time frame. "The stock market enjoyed a good year's return in the first quarter. The market is now a bit extended and it may be getting ahead of itself," said Alan Gayle, senior investment strategist and director of asset allocation at Atlanta-based RidgeWorth Investments. The Dow Jones industrial average passed its previous all-time high of 14,253.77 on March 5, and continued to gain an additional 2 percent through March 27.