Fund managers acting more cautiously

The latest findings from independent financial research company Defaqto suggest that fund managers are acting more cautiously than 12 months ago because of growing fears of a double-dip recession.

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. A year ago we saw these levels falling to less than 5%, 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 2% more than October 2009 - indicate a dip in confidence."

In July 2010, cash accounted for 6.6% of fund asset allocation. In this period, UK equity exposure also fell to its lowest level for several years - 30.8% - while property and alternative asset classes increased as managers looked further afield to achieve positive returns.