NEW YORK May 30 U.S. fund managers slightly
increased their recommended stock holdings and pared back bond
allocations in May, a Reuters poll showed on Friday.
The recommended rise in stocks, to an average of 56.5
percent of a global balanced portfolio, marked the largest
two-month increase since December, although it was around that
level at the start of the year.
Exposure to U.S. stocks was a tad lower than in April,
reflecting caution as the S&P 500 index marched to record
Fixed-income allocations have declined since January despite
the longest rally in longer-dated U.S. Treasury bonds in many
years. The difference has been parked in cash, according to the
poll of 12 firms conducted May 12-28.
That, along with the absence of any major change within the
overall recommended equity allocation, suggests that value
investors remain cautious despite very low volatility in
The S&P 500 rose 30 percent last year and is up over
3 percent this year, hitting another record closing high on
"If you look underneath at small-cap indices you find that
they are not following suit. The market advance is getting
narrow and it argues for caution," noted Alan Gayle, portfolio
manager at RidgeWorth Investments in Atlanta, Ga.
The Russell 2000 index, which tracks small-company stocks,
is down 2 percent on the year.
The U.S. Treasury market, on the other hand, has had a
stellar year so far, catching many traders and investors off
guard. But the poll suggests this has been a largely
institutional trade within fixed-income.
The recommended bond allocation fell to its lowest since
April 2013, although there was a slight rise in U.S. Treasuries
in May. Treasury yields have plummeted from 3.0 percent at the
start of the year, to 2.5 percent on Friday.
(Reporting by David Randall; Polling by Diptarka Roy and Swati
Chaturvedi; Editing by Ross Finley and Susan Fenton)