Shares are losing some of their appeal as concerns about the eurozone debt crisis linger, while Asian currency bonds are gaining favour.
The worldwide search for yield has also resulted in bonds recording their second-largest net inflow of funds in five years during the fourth quarter of last year, a global survey shows.
About 57 per cent of global fund managers, a fall from 75 per cent in the previous quarter, were holding an overweight position in equities in the second quarter of this year, the HSBC survey released on Thursday found. While no fund manager was underweight in shares, almost half took a neutral stance compared with 25 per cent in the first quarter.
"It is a little bit more centred and balanced than the last quarter, but there's still a fair amount of optimism towards equities," HSBC Bank Australia's head of wealth management, Mike Danby, said. "On the value stakes, there are still strong fundamentals in play as well."
Fund managers were more positive about equities in emerging markets, increasing their overweight positions in the second quarter to 57 per cent from 29 per cent in the previous three months.
"Since 2007, emerging market economies have accounted for more than 50 per cent of the world's growth. There is an ongoing growth story and good strong fundamentals," Mr Danby said.
In contrast, fund managers moved towards a more neutral stance in the North American and European markets.
In the fixed income market, there was a big shift towards Asian local currency bonds, with 75 per cent of fund managers turning overweight from 33 per cent in the first quarter of this year.
Net fund flows into Asian bonds rose 10.7 per cent in the fourth quarter of last year as bond funds recorded their second-largest net inflow - a total of $US55.9 billion ($54.5 billion) - in five years.
"The strong flows to bond funds reflect that investors are still seeking yield amid the low interest rate environment," Mr Danby said.
Funds under management of the 10 fund managers surveyed grew 3.2 per cent to almost $US4 trillion in the fourth quarter of last year.