European funds cut their equity exposure in February to the lowest since December 2014 while raising holdings of bonds and non-conventional assets as a global stock market sell-off stretched into its fourth month.
The poll of 16 European asset managers was conducted between February 15-24, a period in which many investors continued to favour safe havens and European stocks headed for a third straight loss-making month.
Even the promise of further policy easing failed to boost risk appetite as euro zone data pointed to renewed signs of deflation and weakening consumer sentiment.
The funds' equity holdings fell to 44 percent of global balanced portfolios, as bond holdings rose to almost 40 percent, the highest level since March 2013.
The allocation to alternative assets - hedge funds, private equity and infrastructure - rose to 9.8 percent, the highest for at least five years, as fund managers sought out assets less correlated to world markets, and ways to protect returns.
"The market turmoil ... serves to emphasise the importance of holding a range of diversifying trades in portfolios," Boris Willems, a strategist at UBS Asset Management, said.
"Our intention is to scale back directional risk exposure in our portfolios and adopt a more neutral stance, seeking to benefit from relative value equity trades."
Within global equity portfolios, managers raised their exposure slightly to US, British and European stocks, but trimmed Japan's weight by two percentage points to 6.6 percent.
However, allocations to Asia excluding Japan were raised to 7.3 percent, the highest since January 2015, in a sign some beaten-down emerging markets are starting to lure back investors.
Pioneer Investments Group's chief investment officer Giordano Lombardo said he was "cautiously positive" on certain emerging markets, which he perceives as oversold in some areas.
Within global fixed income portfolios, exposure to US bonds rose 4 percentage points to 24.6 percent, while euro zone debt holdings slumped by 3 percentage points to 52.7 percent and Japanese bond holdings were almost halved to 2.2 percent.
That was despite the promise of more policy easing in the euro zone and the likelihood that Japan will do whatever it takes to foster economic recovery.
Several respondents concluded that central banks could no longer positively influence markets as in the past, with little lasting impact from fresh stimulus measures, such as the Bank of Japan's surprise adoption of negative interest rates.
"Market participants have realised that central bankers are not able to generate growth or inflation just by loosening monetary policy," said Jan Bopp, an asset allocation strategist at Bank J. Safra Sarasin.
He said investors were more likely to be disappointed after a central banker's statement these days, as opposed to the positive surprises of the past.
This was evident on Monday as markets fell on disappointment that G20 leaders who met in China at the weekend had failed to agree new steps to revive the world economy.
Some asset managers argued that the limits of what could be achieved with negative interest rates had been reached and were having a detrimental effect on banks' and insurers' profitability. "The marginal benefit of further central bank easing would be small, while the drawbacks are getting more prevalent," said Raphael Gallardo, a strategist at Natixis Asset Management.