Fund managers 'acting more cautiously'

Fund managers are currently acting more cautiously than 12 months ago over fears that the recession may turn out to be a double dip one, a new poll has indicated.

Research carried out by Defaqto shows that, in July 2010, cash accounted for 6.6 per cent of fund asset allocation, while UK equity exposure also fell to its lowest level for several years - 30.8 per cent as managers looked further afield to achieve positive returns.

Fraser Donaldson, Defaqto's Insight Analyst for Funds, said the level of confidence and uncertainty in the market is usually reflected by the cash element in funds, with last year's levels falling to less than five per cent, which was the lowest for several years.

"There was a confidence that the recession was over and that the first green shoots of sustained recovery were being seen. However, the levels of cash in July 2010 - almost two per cent more than October 2009 - indicate a dip in confidence," he noted.

It comes despite new figures from the Investment Management Association revealing that global bond sales have reached an all-time high, with net retail sales for July standing at £2.2 billion.

Posted by Claire Robin