Investor equity holdings at fresh 2009 high in June

A man stands on the balcony above the DAX board at the Frankfurt stock exchange June 24, 2009.

NEW YORK (Reuters) - U.S. fund managers' exposure to stocks rose to the highest level this year in June, encouraged by growing evidence the economy is coming out of its worst recession in decades, a Reuters poll showed on Tuesday.

Based on 12 U.S.-based fund management firms interviewed between June 16 and 29, firms held an average of 62.5 percent of their assets in equities, up from 61.6 percent a month earlier and 60.6 at the start of the year.

It was the third consecutive increase.

"We do believe the U.S. economy is close to beginning a recovery," said David Joy, who helps oversee about $160 billion as chief market strategist at RiverSource Investments in Minneapolis and is now modestly overweight in stocks.

Joy cited several indicators underscoring his optimism: the stabilization of weekly jobless claims, rising durable goods orders, growth in the money supply, narrowing credit spreads and signs of life in the housing market.

The shift into equities tallies with a drop in volatility, enabling money managers to take on more risk.

On Monday, the Chicago Board Options Exchange Volatility Index .VIX, often called Wall Street's fear gauge, fell to its level before the September collapse of Lehman Brothers.

But investors are still maintaining exposure to high-quality investment grade bonds as well as risky "junk" debt for their generous returns.

In June, investors held an average of 31.3 percent of their assets in bonds, up a touch from 31.1 percent in May. And while sentiment is moving toward equities, the market has still not returned to average pre-crisis levels.

In 2008, exposure to equities peaked in March at 64.7 percent of assets -- the same month that U.S. bank Bear Stearns collapsed.

Headwinds including high unemployment and anemic growth rates are likely to limit gains in equities, following their recent rally of 35 percent and 40 percent.

"We are still concerned about the long-term trend growth in the U.S.," said Alan Gayle, senior investment strategist at RidgeWorth Investments in Atlanta.

In this regard, businesses will be hard-pressed to generate top-line sales growth. "We will likely see a more selective advance in the stock market," Gayle said.

(Polling by Bangalore Polling Unit; Editing by Mike Peacock)