LONDON Global investors end the volatile first half of this year by cutting equity holdings to a nine-month low and boosting cash as they sought refuge from a risk sell-off triggered by concerns over the Federal Reserve's plan to slow its money printing.
Monthly asset allocation polls of 53 investors across the United States, Europe and Japan, released on Friday, showed funds cut their average equity holdings to 49.5 percent of their portfolios this month from 50.9 percent in May.
This is the lowest reading since September and below a three-year average of 51.3 percent.
They lifted cash to 5.6 percent from 4.5 percent in May, its highest since September. The bonds allocation rose to this year's high of 38.4 percent.
The poll was conducted between June 16 and 27, when world stocks .MIWD00000PUS hit a January low, having erased more than half of this year's gains.
After a buoyant first quarter for risky assets, the prospect of an eventual end to easy money has spooked financial markets across the board.
Assets that most benefited from cheap money were hit the hardest. Emerging stocks .MSCIEF have fallen 8 percent since May 22, when Fed Chairman Ben Bernanke suggested the bank may reduce its bond buying.
Japanese stocks have lost an even bigger 15 percent .N225 since then, although they remain the best performer of 2013.
"We would consider the biggest threat to be an abrupt end to or fast tapering of quantitative easing," said Monica Defend, head of global asset allocation research at Pioneer Investments.
Investors lifted euro zone bond holdings to 26.7 percent, their highest since March 2012. They also lifted North America, Britain and Japan, while they cut all emerging market debt.
"Central banks may ... tighten monetary policy prematurely and thereby hurt the global economy," said Peter Bezak, portfolio strategist at Bank J. Safra Sarasin.
"A rate hike in the U.S. may drain liquidity in emerging markets, hurt their currencies and force them to hike which in turn leads to collapse of growth."
Within fixed income, investors lifted government debt to a 11-month high of 51.3 percent, at the expense of investment grade and junk bonds.
U.S. fund managers invested an average 36.3 percent of their assets in bonds, the most in over a year and up from 34.8 percent in May. Stock holdings fell to 57.9 percent from 59.1 percent. <US/ASSET>
Japan's fund managers lifted their bond allocations to a record high of 53.6 percent, mainly in domestic bonds, and cut those for equities to a nine-month low of 39.7 percent. <JP/ASSET>
European fund managers boosted cash levels to 7.6 percent, their highest since September, while equities fell to 46.8 percent of their portfolio. <EUR/ASSET>
In Britain, average cash holdings jumped to 9 percent from 5.8 percent, their highest in more than a year. Equity holdings fell to 53.6 percent, while bond allocations fell to 24.4 percent, the lowest level in more than 12 months.
(Additional reporting by Sam Forgione in New York, Tom Bill in London, Massimo Gaia in Milan, Rahul Karunakar and Sarmista Sen in Bangalore and Dominic Lau in Tokyo; editing by Stephen Nisbet)