Investors cut back on equities and lifted exposure to bonds in March, signaling a degree of caution about coming months as world stocks headed for their fourth quarterly rise.

Reuters polls of 47 leading investment houses across the world also hauled back exposure to emerging market stocks, reflecting the sector's recent underperformance, particularly China.

Overall, the investment houses held an average of 53.5 percent of a typical mixed-asset fund in equities, down from 55.4 percent in February,

Bond holdings rose to 34.5 percent from 33.3 percent, with the increase coming in investment grade corporate credit rather than government debt or higher yield.

Cash fell to 4.5 percent of an average portfolio from 4.8 percent, suggesting that investors are still seeking yield over the safest of safe havens.

The pull back in equities comes as world stocks looked to be putting in their fourth consecutive quarterly rise. Each quarter has gained less than the previous one, however, with the current one expected to end with gains of just 2-3 percent <.MIWD00000PUS>.

That is seen by some as a sign that last year's rally is petering out in the face of macroeconomic headwinds.

Risks include government belt tightening leading to weaker growth in developed market economies and inflation fears in emerging markets, especially China, spreading, said Stefan Rondorf, portfolio manager at Allianz Global Investors.

The poll, meanwhile, confirmed suspicions that demand for once red-hot emerging market assets was slowing.

The percentage of equities in emerging market stocks fell to 12.3 percent in March from 14.3 percent in February, while emerging market bonds made up 5.8 percent of a fixed income portfolio versus 6.7 percent a month earlier.

REGIONALLY

U.S. fund managers slightly decreased their exposure to equities in March and raised their bond allocations.

The 12 U.S.-based fund management firms surveyed held an average of 64.6 percent of assets in equities, compared with 66.2 percent a month earlier, which was a post-crisis high.

Fixed-income holdings rose to an average of 30.0 percent, from 29.1 percent in February. Cash exposure remained steady at an average of 1.7 percent.

Continental European investors lifted cash to a 10-month high and boosted bond positions while they cut back on equities for a second month running.

The poll of 14 European-based asset management firms showed a typical mixed portfolio holding 48.0 percent of its assets in equities, its lowest level this year and down from 49.8 percent in February.

Allocation to bonds rose to 39.3 percent this month from 37.4 percent in the previous period. Cash rose again to 6.7 percent from 6.5 percent.

Japanese fund managers shifted money to stocks from bonds.

The 11 poll participants raised their average weighting of stocks to 46.5 percent in March from 45.7 percent in the previous month while they cut bonds to 47.6 percent from 48.0 percent.

Cash holdings dropped to 3.0 percent from 3.5 percent a month earlier.

British fund managers cut equities, although a change in the survey sample exaggerated the move.

The 10 participants held 55.0 percent of their funds in equities in March, down from 59.9 percent. Bond holdings increased to 21.0 percent from 18.5 percent.

With worries that upcoming UK election will not throw out a clear winner, the managers reduced exposure to both British stocks and bonds.

Separate polls, with data not included in this story, were also issued for China and India.

(Additional reporting by Jennifer Ablan in New York, Akiko Takeda in Tokyo, Natsuko Waki and Chris Vellacott in London and Bangalore Polling Unit; Graphic by Scott Barber; Editing by Ruth Pitchford)

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