Fund managers are acting more cautiously now than they were this time last year, because of growing fears that the UK economy might be half way through a double-dip recession.
The cash element in funds has been falling, and this is causing a uncertainty and a lack of confidence in the market, according to Fraser Donaldson, insight analyst for funds at independent financial research firm Defaqto.
Levels of confidence and uncertainty fell to less than five per cent 12 months ago, their lowest level for several years, following the UK's exiting the recession, "and that the first green shoots of sustained recovery were being seen," Mr Donaldson said.
But cash levels were almost two per cent higher in July than they were last October, accounting for around 6.6 per cent of fund asset allocation, which he believes indicates a fall in market confidence.
During this time, UK equity exposure fell to 30.80 per cent, its lowest level for several years, Defaqto has found, while managers looked further afield to achieve higher returns, increasing investment in property and alternative asset classes.
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