POLL-German fund managers raise equity exposure

FRANKFURT, June 30 (Reuters) German fund managers increased their equity exposure in June and some expect to place more funds in stocks in the next few months, a Reuters-Lipper poll showed on Friday.

The median in the poll of 12 German asset management companies was for equity holdings of 49.5 percent in a global balanced portfolio in June compared with 41 percent in May.

''We have used the market correction to increase our equity exposure,'' said Michael Herzum, a portfolio manager at Union Investment.

Thirty percent of the respondents said they planned to increase their exposure to equities over the next three months, up from just over one in five the month before.

Another 30 percent now said they expected to reduce their stocks allocation, down from over 44 percent a month ago.

However, over 40 percent of the German fund managers who participated in the June poll remained underweight equities relative to benchmark.

''Our customers are risk averse and are asking for somewhat more conservative products,'' said Marc Pasdag, a portfolio manager at Prometheus Vermoegensmanagement, adding that relative valuations continued to favour equities over bonds.

''Investors will return to stocks due to the lack of alternatives,'' Pasdag said, forecasting a rise in share prices towards September.

Equity markets around the world slumped between mid-May and mid-June, prompting a shift into cash.

The German fund managers who took part in the Reuters-Lipper poll held almost 18 percent in cash at end-June, up from almost 16 percent in May and 15 percent in April.

Their bonds exposure was broadly unchanged in June from May at around 30 percent with a clear majority still underweight fixed income. Ten percent now expect to increase their bonds exposure in the next three months, up from zero at end-May.

REUTERS MQA ND1738