Investors showing optimism grows

Investors are entering 2011 in a relatively bullish mood, raising equity holdings to a 10-month high, increasing exposure to high-yield credit and cutting back on Government debt, according to a Reuters poll.

A combination of improving economic data and a belief in future robust corporate earnings has lifted the appetite among investors for equities over the past few months.

"People are coming off the sidelines and buying stocks," said Keith Wirtz, president and chief investment officer at Fifth Third Asset Management in Cincinnati.

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There was also sign of risk appetite in an increased exposure to riskier, higher-yield bonds.

At the same time concerns have risen that yields on benchmarket government bonds are too low, providing little return and threatening a sell-off.

Investors have cut back overall exposure to bonds.

They favoured United States and euro zone government debt over most emerging markets, which have proved very popular during 2010.

Exposure to emerging market debt was 8.1 per cent of a bond portfolio for the month, compared with 9.6 per cent seen a month earlier.

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Investors also regained some composure about euro zone government bonds following the crisis over Ireland's debt.

They raised exposure within a bond portfolio to 31.5 per cent from 31.2 per cent, although these numbers remain well below the more than 42 per cent seen at the beginning of 2010.

European fund managers lifted equity holdings to a 11-month high and also boosted bonds.

Exposure to UK stocks within equities jumped to 16.3 per cent from 12.6 per cent in November.

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