The significant shift from equities to bonds and cash is no surprise as the European debt situation remains unsettled, although there are still opportunities for investors, according to HSBC Australia's head of global investments.
"I wasn't surprised by the flight to quality, with an increased overweight into bonds and quite a large increase for cash at 44 per cent, previously zero in the last quarter," Geoffrey Pidgeon said.
"[This] reflects investor sentiment and also the relative value we're seeing in the market."
HSBC's most recent Fund Managers' Survey found half of surveyed fund managers had taken an underweight view towards equities, allocating 50 per cent compared to 25 per cent last quarter.
The results showed a preference for an overweight allocation to cash at 44 per cent and bonds at 22 per cent, both previously at zero.
Pidgeon said the results were fairly predictable.
"In Q4 relative to Q3, it does reflect what we're hearing in the broader market," he said.
"Our base scenario is that we won't see synchronised recession globally but we will see weaker global growth, which will go from now until the middle half of next year."
He said while the move away from equities would continue, there would be "pockets of value" in the equities market.
"There are two things that will change the attitude towards equities - if the euro concerns dissipate and seeing bond yields equal or lower than that of equity dividend yield," he said.
"We're starting to see pockets of value, in particular in areas such as China where the banking stocks have been sold off, in Russia where energy stocks have been sold off and in Taiwan where technology stocks have been sold off to levels we haven't seen in many years."
He said he was optimistic about the new year from a medium-term perspective.
"We're looking for double-digit growth in emerging markets and Asia next year. The majority of that will come during the second half once the broader economic issues play out."
The HSBC survey analysed 13 of the world's top funds management houses and was based on funds under management, asset allocation views and global money flows during October and November.
