Professional investors are taking profits from stock market investments and increasing the cash element of their clients's portfolios.
They say opportunities in the equity and bond markets in recent months have become so scarce that they believe it is now "safer" to keep a significant proportion of assets in cash.
Investors Chronicle has spoken to a number of wealth managers and managers of multi-asset funds who have poured an extra 10 per cent of their clients' investments into cash or cash alternatives, such as money-market funds.
The decision comes despite the historically poor rates on cash and returns on cash alternative funds, a number of which have managed to lose money over the past year.
Duncan Lawrie, the private bank, has decided to move around 10 per cent of its clients' investments into cash in August.
Seth Cowburn, head of investment, said: "We are writing to our clients to let them know about this. We don't put our clients money in the stock market unless we're confident it'll make the returns they're after. We're less positive about the market than we were a year ago. From August, we'll be investing more money across individual gilts, gilt funds and money market funds."
Fund house Schroders has also recently upped the cash allocation in a number of its multi-asset funds. The most significant asset switch was in its International Selection Global Diversity Fund (ISIN: LU0995125043), where cash now makes up 31 per cent of the portfolio, compared to 20 per cent a year ago (to 28 July 2014).
Joe Le Jehan, a fund manager on the Schroders Multi-Management team, said: "There aren't many cheap-looking equities left in the stock market. And we don't like the bond market as we don't rate its long-term value. We've been experiencing one of the longest bull runs on record which has been going on nearly three years. But nothing ever goes up in a straight line."
But JP Morgan says it has recently reduced the risk of its multi-asset funds by around 30 per cent without increasing its allocation to cash. David Shairp, a senior strategist and portfolio manager at the firm, said: "We have avoided piling into cash because returns have been very low. We are less positive on risk assets but our strategy remains broadly constructive, and we still think there are yield opportunities in European equities and fixed income."
