October 31, 2018 / 1:40 PM / 10 months ago

U.S. funds prefer domestic assets and a but bigger cash buffer: Reuters poll

United States one dollar bills are seen on a light table at the Bureau of Engraving and Printing in Washington November 14, 2014. REUTERS/Gary Cameron/File Photo

(Reuters) - U.S. global fund managers made no significant changes to their recommended model portfolio in October, still preferring to hold North American assets but with a slightly larger cash buffer, a Reuters poll showed.

Equity allocations accounted for an average 56.7 percent of the global portfolio, essentially unchanged from 56.6 percent in September. Bonds were also static, at 35.5 percent, according to the Oct. 17-30 survey of 12 U.S. fund managers.

For the third month in a row, the notable change was a recommended increase in cash holdings, now up to 5.3 percent, the highest in over a decade.

Recommendations for allocations to North American stocks were also increased to the highest in two years, at the expense of euro zone and emerging market equities. Those findings are based on a smaller sub-set of respondents.

The cash holdings suggest even long-term investors are getting more defensive in the midst of market turmoil. The S&P 500 .SPX is headed for its biggest monthly percentage drop in more than eight years and the broad world stocks index .MIWD00000PUS losing about $4 trillion in value in October.

“The combination of aggressive Federal Reserve rate hikes, an escalating and potentially prolonged trade dispute with China and the upcoming mid-term elections has generated a great deal of anxiety for the markets,” said Alan Gayle, president of Via Nova Investment Management. “Fear and uncertainty are currently dominating market psychology.”

“We continue to favor the U.S. market over the international space, because of its higher earnings and revenue growth relative to the rest of the world. Moreover, despite the recent weakness in the U.S. markets, the domestic space has been a relative safe haven in a challenging market.”

Reporting and polling by Rahul Karunakar and Mumal Rathore, editing by Larry King

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