Fund managers are pessimistic about global stock investments and are keeping higher cash positions to handle client redemptions, according to the latest quarterly survey of the industry by HSBC. The review, conducted among fund managers from 12 of the world's best-known houses, showed 57 per cent of the respondents rated bonds as their 'overweight' option and are keeping a lower exposure to equity in the first quarter. Only 33 per cent were 'overweight' in equity, down from 50 per cent a quarter earlier. Meanwhile, one-third were overweight in cash, up from 25 per cent. 'The continuously weakening equity market environment has forced [institutional investors] to keep lower exposures to equity investments, especially in emerging markets ... and a higher-cash-position strategy is necessary in order to handle huge client redemptions,' said Bruno Lee Kam-wing, HSBC's head of liabilities business and wealth management for personal financial services in Hong Kong. However, fund managers are turning bullish on China's equities as its stimulus measures are expected to support domestic demand and economic growth. Sixty-seven per cent of fund managers are overweight in Chinese equities, well above the 50 per cent weighting a quarter earlier. The mainland equity market lost 10.7 per cent in the fourth quarter, compared with a 21.8 per cent drop in global equities. Total assets under management of the 12 fund houses have dropped 8.2 per cent to US$3.27 trillion at the end of the quarter.