Managers hike cash to Lehmans levels as valuations turn 'extreme'

Fund managers have raised cash levels in their equity and bond portfolios to levels last seen at the height of the Lehmans crisis as valuations in risk assets hit extremes.

Equity fund managers are reverting to positions last held during the credit crisis in an attempt to protect their portfolios, amid fears there could be a sharp correction in equity markets. Investors have poured billions of pounds into defensive stocks while shunning their more cyclical cousins - such as miners and banks. But managers say valuations are now at extremes as a result, making it hard to invest in either area, and leaving markets looking vulnerable. As a result, managers are battening down the hatches and building up cash on a scale not seen since the Lehmans crisis. ...