LONDON Investors have ended what was a dismal quarter for many of them on an up note, lifting their exposure to equities in the hope that government stimulus packages will turn around the beleaguered global economy.
Reuters polls of 45 leading investment houses in the United States, Japan, continental Europe and Britain showed an average portfolio holding 55.1 percent of its assets in stocks.
It was the highest level this year and an increase from 54.3 percent in February.
The polls, released on Tuesday, also showed investors cutting back on bonds to 35.0 percent from 35.6 percent and keeping cash level at 5.7 percent.
Equity holdings remained below long-term average levels, however.
The findings match market movements in March. Global stocks as measured by MSCI .MIWD00000PUS were on track for their best performance since late 2002 on Tuesday, although in the quarter they have lost around 12 percent.
"It's quite clear investors are becoming a bit more enthusiastic. Right now it's a technical bounce we see but it could be more sustainable than previous rallies," said Philipp Baertschi, equity strategist at Swiss wealth manager Sarasin.
Investors have been gradually recovering their appetite for risk as government have launched huge programmes to stimulate economies and have bailed out troubled banks. Other surveys have also shown flows into equities.
Widespread caution remains, however, as reflected by the polls' showing that both bond and cash levels are well above long-term average levels. Investors differ over the likelihood of the current rally lasting.
"As the fiscal measures will play out their effects in each country, the pace of worsening in the economy will likely slow," said Yuichi Kodama, chief economist at Meiji Yasuda Life, in Japan.
"But an economic recovery will be slow-paced due to the credit crunch. We can't expect share prices to have much upward potential."
U.S. investors cut stocks slightly in favour of fixed income.
The 12 U.S.-based firms in the poll held an average of 60.2 percent of their assets in shares, down from 60.7 percent in February. Bonds rose to 33.3 percent from 32.7 percent.
Standouts of the month were high-quality corporate bonds and high-yield "junk" debt.
Fund managers in continental Europe raised their equity allocations to a seven-month high and cut bonds and cash as rising world stocks boosted their risk appetite.
The 12 firms held an average 46.6 percent in equities versus 44.2 a month earlier. Some 38.8 percent of assets were in bonds, down from 40.8 percent.
Cash levels remained high at 8.3 percent, but were down from 8.9 percent in February.
Japanese fund managers raised their global stock weightings for the second straight month in March on prospects that share prices may hold up as governments take fiscal stimulus steps.
The poll of 11 fund managers had an average stock allocation of 51.2 percent, up from 50.7 percent a month earlier and a 5 1/2-year low of 49.8 percent in January.
Bond allocations fell to 44.2 percent, from 44.8 percent the previous month and a decade high of 45.7 percent in January.
British fund managers also lifted stocks -- to 62.4 percent of a portfolio from 61.7 percent.
The 10 respondents cut bonds to 23.7 percent from 24.1 percent.
(Polling by Bangalore Polling Unit; Additional reporting by Jennifer Ablan in New York, Natsuko Waki and Laurence Fletcher in London, Mari Terawaki and Tetsushi Kajimoto in Tokyo; Editing by Ruth Pitchford)