POLL-Funds boost bond holdings to 12-month high

By James Molony

LONDON (Reuters) - Country fund managers boosted bond holdings and marginally increased equity weightings in November as financial authorities took further steps to shore up the financial system, a Reuters poll showed on Thursday.

The poll of 11 UK-based investment firms showed average bond holdings rose to a 12-month high of 24.6 percent in November, up from 21 percent the previous month. Six out of the 11 managers increased bond holdings including one firm which increased its allocation to 47.5 percent from 30 percent.

Average equity weightings rose marginally to 61 percent up from 60.9 percent at end-October. Of the 11 participants, four managers increased exposure to equities.

Cash holdings fell back to 7.7 percent in November having edged up to 9.3 percent in October.

UK funds trimmed exposure to property to 2.2 percent in November from 2.7 percent. Weightings in alternatives were cut to 4.6 percent from 6 percent.

Chris Paine, an analyst in the asset allocation team for Henderson Global Investors, said 2009 could potentially see a big rally in equities and other assets.

"The sheer size of the global policy response to the financial and economic crisis will likely push asset prices up if the credit creation mechanism starts to work again," Paine said.

"This could mean equities, but could easily be infrastructure if that's where fiscal policy is directed."