European investors slightly raised stock holdings in September after a sharp risk retreat last month but kept overall portfolios very defensive as concerns about the eurozone crisis persisted, a Reuters poll showed on Thursday. The survey of 17 Europe-based asset management firms showed a typical balanced portfolio held 42.4 percent of equities in September, down from the August trough of 41.2 percent.
Bond holdings, including government and corporate debt, dipped to 40.9 percent from last month's 41.9 percent, which was their highest in at least a year.
Cash holdings were at 10.3 percent, down slightly from 10.4 percent but staying historically high and almost double December's level.
The poll was taken between September 19 and 28, when concerns about the escalating eurozone sovereign debt crisis pushed world stocks to a fresh 14-month low, before they recovered slightly on hopes of policymaker action.
"We are positioned for a cautious medium-term scenario since we remain underweight equities. The main risk to our current asset allocation strategy is that at the end of September, we consider that investors' sentiment has reached an extreme negative level," said Jean-Yves Dumont, head of asset allocation strategy and funds at Dexia Asset Management.
"We could therefore experience a significant rally should the newsflow turn more positive on the US economy or a concerted European solution."
Within equity portfolios, respondents raised North American holdings to 36.3 percent from 35.1 while they took eurozone holdings down to 30.3 percent from 31.6.
Fund managers cut eurozone bond holdings further to 64.7 percent from 68.8 percent while raising North American holdings to 17.2 percent from 15.6.
Fund managers liked corporate bonds and disliked eurozone government bonds the most. They preferred the materials sector within stocks.
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