September 28, 2018 / 11:02 AM / 20 days ago

POLL-U.S. fund managers favor U.S. assets, but recommend more cash

Sept 28 (Reuters) - U.S. fund managers recommended increasing in cash holdings in September to a near four-year high, sticking to a cautious approach as the latest U.S.-China trade tariffs kicked in and showed no signs of abating, a Reuters poll showed.

But recommended allocations to North American assets rose to the highest since June 2017, at the expense of British, euro zone, and particularly emerging-market holdings, according to a smaller sub-set of the latest Reuters poll of 12 fund managers.

Global equity allocations accounted for an average 56.6 percent and bonds 35.5 percent, essentially unchanged from the previous month. The most notable change was an increase to cash holdings to 5.1 percent, the highest since December 2014.

“Several economic data points are bringing a lot of confidence to the market place, but the trade war tops the list of worries, so it is best to be ready to jump in to make the most during market drawdowns,” said a fund manager at a large U.S. investment firm.

Global financial markets see-sawed in September, with solid U.S. economic data and an upbeat Federal Reserve offset by U.S. tariffs on some $200 billion worth of Chinese goods taking effect, along with Beijing’s retaliation .

However, fund managers in September still favored stocks, particularly U.S. equities, despite their being rated as expensive.

“The underlying fundamentals for the economy and corporate profits remain very sound and could support higher equity prices going into 2019,” said Alan Gayle, president at Via Nova Investment Management.

“If trade tensions ease, we would expect international and emerging-market stocks to rebound. But betting on emerging-market stocks is to pick a date when trade issues are resolved, and we don’t know that date. Until then, we believe a higher relative U.S. weighting is appropriate,” Gayle said.

Global wrap-up:

Europe poll story:

UK poll story:

Japan poll story:

China poll story: (Reporting and polling by Rahul Karunakar and Indradip Ghosh)

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