U.S. funds raise cash stakes as stock market wobbles

Mon Mar 31, 2014 8:10am EDT
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By David Randall

NEW YORK (Reuters) - U.S.-based fund managers cut their average stock holdings to a five-month low in March and held their highest average position in cash since December, as Russia's move into Crimea spooked global markets, a Reuters poll showed.

It was the second straight month that fund managers have lowered their equity holdings in global model portfolios, suggesting investors do not expect the market to continue a rally that pushed the benchmark Standard & Poor's 500 index up nearly 30 percent in 2013.

"What we're seeing is that more investors are taking risk off the table. I know I am," said Alan Gayle, a fund manager at RidgeWorth Investments, who oversees approximately $400 million in assets.

Gayle has been adding to his short-term bond positions due to a combination of rising geopolitical risk in the wake of Russia's expansion into Crimea and a brutal winter in much of the United States that has cut into corporate profits and home sales, he said.

"Investors are putting a lot of pressure on the economy to deliver in the second quarter and it may be challenging for the economy to live up to expectations," he said.

The benchmark Standard & Poor's 500 fell 1.3 percent on March 13, pushing the index into a loss for the year.

The market staged a slight rebound since, giving it a year to date gain of less than 1 percent. By this point last year, the S&P 500 was already up over 8 percent for the year, according to Thomson Reuters data.

Geopolitical tensions have put a sizeable dent into analysts's forecasts for stock market gains, a separate Reuters poll conducted earlier this month showed. <EPOLL/WRAP>   Continued...

Traders stand outside the New York Stock Exchange prior to the opening bell October 31, 2012. REUTERS/Brendan McDermid