LONDON British investors continued to cut cash and increase their exposure to euro zone equities in November, picking up stocks oversold in the panic over the currency bloc's debt crisis, a Reuters poll showed.
The average exposure to cash in global balanced portfolios fell to 5.6 percent in November, from 6.1 percent a month earlier, according to the monthly survey in which 13 portfolio managers and chief investment officers took part.
Cash allocations are now at their lowest level since March.
Exposure to stocks in balanced portfolios was 50.8 percent on average while investors allocated 28.6 percent to bonds, 2.9 percent to property and 12.2 percent to alternative assets.
The average allocation to the euro zone in global equity portfolios rose to the highest levels since August 2011 at 13.5 percent, from 13.3 percent in October.
Investors highlighted the European Central Bank's bond-buying plans - dubbed Outright Monetary Transactions (OMT) - as marking a turning point in sentiment for many.
"The ECB's announcement of its OMT program in the summer removed a good deal of the near-term tail risk of a disintegration of the euro zone, going a long way to easing market concerns," said Alec Letchfield, chief investment officer for UK Wealth at HSBC Global Asset Management.
"We had been overweight equities prior to this announcement, however the news enabled us to increase our level of conviction and extend the position further."
Nevertheless, investors warned against complacency, noting other risks to investment portfolios, particularly the so-called U.S. "fiscal cliff" of looming spending cuts and tax rises which could derail economic growth if lawmakers fail to come up with a deal to defer them.
"In the U.S. a serious drag on economic activity may be avoided by a deferral of the big fiscal adjustments, but that will only leave the question open for 2013," said Matthew Farrell, investment specialist at London and Capital.
However, a decisive win for Barack Obama in the recent presidential election was seen as a boost for prospects of resolving the fiscal problem in an orderly manner because of a weakened political opposition.
"The shellacking that the Republicans took in the recent election will force them to play ball ... rather than force the economy over the fiscal cliff in a scorched earth policy," said Thomas Becket, Chief Investment Officer at Psigma Investment Management.
Some also expressed concerns about mounting evidence of economic slowdown in China and uncertainty about how the country's new leadership will address the challenges.
"In China, the outline of the reform program for the incoming administration remains to be settled," said Andrew Milligan, head of global strategy at Standard Life Investments.
Poll respondents also continued to be wary of the banks, particularly in Europe with many aspects of the financial crisis far from resolved.
Financials were widely cited as the stocks in which investors were "most underweight" against benchmarks.
(Editing by Susan Fenton)