Thursday October 28, 1:57 pm Eastern Time
Reuters Asset Allocation Poll (New York) Oct 28
U.S. Domestic Allocation
(Benchmark: Lehman Aggregate Index)
US Allocations Treas Corp Mtge Agen Cash Other
October Secur Secur Backed
AmEx Asset Mgmt 23 28 0 34 12 3
John Hancock 15 45 20 20 0 0
Meridian 40 40 0 0 2 18
Stein Roe 9 40 32 3 2 14
Tweedy, Browne 0 77 0 0 3 20
Value Line 9 3 30 52 6 0
Waddell & Reed 15 50 25 3 1 6
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October Avg 16 40 15 16 4 9
August Avg 29 27 15 18 7 5
April Avg 22 34 26 6 4 8
Global Equity Fund
(Benchmark: Morgan Stanley Capital International)
EQUITIES US CAN UK GER* FRA* EUR* EUR* JAP ASIA EMRG CASH
October INS OUTS X-ASIA
AmEx Asset 40 0 10 5 13 7 4 13 6 1 2
Fleet Boston 20 0 0 0 0 0 0 25 15 40 0
John Hancock 39 2 9 4 6 10 5 17 6 1 1
Meridian 40 0 4 0 0 4 25 23 2 0 2
Salomon SB 42 2 3 0 2 0 3 13 18 18 0
Tweedy, Br 11 1 11 4 2 12 16 23 13 1 6
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October Avg 32 1 6 2 4 5 9 19 10 10 2
August Avg 38 1 7 3 5 7 9 15 10 4 3
April Avg 37 2 10 5 5 8 8 11 8 2 3
Global Bond Fund
(Benchmark: Salomon Brothers World Government Bond Index)
BONDS US CA/AU UK GER* FRA* EUR EUR JAP ASIA EMRG CASH
October NZeal INS OUTS OTH X-ASIA
AmEx Asset 31 9 12 9 3 9 6 0 12 9 2
Fleet Boston 10 0 10 10 0 0 0 0 25 25 20
John Hancock 30 5 10 10 10 10 0 20 0 5 0
Loomis Sayles 4 23 0 15 0 31 0 4 9 13 1
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October Avg 19 9 8 11 3 13 2 6 11 13 6
August Avg 39 9 8 10 5 8 4 4 2 5 6
April Avg 45 8 6 12 3 8 8 3 0 3 2
*Allocations for Germany and France are not included in the Euro-Ins category, due to their larger market capitalization.
The Euro-Ins category includes the remaining eurozone countries of Belgium, Luxembourg, Netherlands, Austria, Portugal, Spain, Ireland, Italy and Finland.
By Dawn Xavier
NEW YORK, Oct 28 (Reuters) - U.S. fund managers pulled money out of American stocks and increased their holdings of Japanese equities in recent months, as rising U.S. interest rates dampened the outlook for domestic markets, a Reuters poll showed Thursday.
U.S. Treasury holdings, meanwhile, were reduced by nearly one half largely in favor of outperforming corporate securities, according to the poll.
Equity allocations to Japan rose on average to 19 percent of U.S. global equity portfolio holdings at the end of October, up from 15 percent two months earlier, a Reuters survey of six U.S. fund managers showed.
Funds earmarked to U.S. equities fell to 32 percent in the latest survey from 38 percent at the end of August.
''Here, you've got the Fed on your back, which is not a good environment to get U.S. stocks to outperform,'' said Rob Podorefsky, senior derivatives strategist at Fleet Boston.
Fleet Boston's allocation recommendations include 20 percent in U.S. equities and 25 percent in Japanese equities.
''You've had more Fed concern develop in the last couple of weeks that didn't exist (before), which is a good reason to stay away from U.S. equities too in the near term,'' Podorefsky said.
Financial markets are pricing in about a 70 percent chance that the central bank will boost the federal funds rate a quarter of a percentage point to 5.50 percent at its next policy-setting meeting on November 16.
Faced with the prospect of rising rates, U.S. fund managers in the Reuters survey sharply reduced their Treasury holdings to 16 percent on average in October from 29 percent at the end of August.
Corporate securities benefitted. These holdings rose to 40 percent from 27 percent over the same period, the survey showed.
Among those shifting bond assets was Bruce Alston, director of fixed income at Value Line Asset Management, who oversees $1.5 billion in fixed income assets. He trimmed Treasury holdings slightly to 9 percent, from 11 percent in August.
''Spreads have come in quite a bit, but I think they have a little bit more to go,'' as treasuries continue to underperform higher-yielding securities, Alston said. ''So as they come in, I may swap back more into Treasuries.''
James Cusser, who manages the $600 million United Bond Fund at Kansas City-based Waddell & Reed, said corporate bonds are a good investment right now.
''The corporations we invest in ... are yielding an awful lot relative to Treasuries on an historical basis,'' Cusser said. ''On a fundamental basis, with earnings coming in strong and a lot of the fundamentals improving, I think corporate bonds are a good place to be,'' he added.
While recent strength in the yen, along with corporate and government restructuring, have boosted Japanese equities, Japanese bond allocations are far more conservative. Japanese bonds averaged about six percent of global bond funds, up slightly from Reuters' August survey.
''There is nothing to be excited about buying Japanese bonds with a 1-3/4 percent yield,'' Podorefsky said. ''To me you don't even start looking at that trade until you're at 4.0 percent.''
The survey was conducted the week of October 25. A similar monthly poll is conducted in London (key GB/ASSET and hit F9), continental Europe (EUR/ASSET, F9) and Japan (JP/ASSET, F9).
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