They remained nervous about emerging market assets however, cutting equity holdings in Central and Eastern Europe, Asia and Latin America, although they tentatively added some fixed income exposure after a sell-off in the first quarter.

The monthly polls covering 50 leading investment houses in the United States, Japan and Europe showed equity holdings within the model portfolio rose to a two-month high of 51.0 percent in April, up from 50.2 percent last month.

Bond weightings fell to 35.6 percent from 36.3 percent in the previous month, while cash dropped to a 5-month low of 6.0 percent from 6.6 percent.

The poll was taken between April 14 and 29, when world stocks <.MIWD00000PUS> bounced higher although lingering tensions between Russia and the West over Ukraine discouraged investors from making aggressive bets.

"We maintain our overall bullish view for the whole year, as an improving economic environment should be supportive for risk assets, particularly developed market equities," said Boris Willems, strategist at UBS Global Asset Management in Zurich.

The benchmark MSCI world equity index <.MIWD00000PUS> is up only 1 percent this year, as February's rally offset a sharp decline in January. The index rose 20 percent last year.

Within equities, investors boosted British holdings to 12.1 percent, the highest since August 2012, while North American weightings ticked higher to a 8-month peak of 42.5 percent.

Emerging equity holdings slipped across the board, except in the Middle East and Africa region which held steady at 0.6 percent.

The respondents lifted bond holdings in emerging Europe, Latin America, Middle East and Africa, while they made no changes to the Asian portfolio.

Investors had less than half of their fixed income portfolios in government securities, while they had 28.8 percent in investment grade and 13 percent in high yield bonds.

"Within fixed income we have become increasingly selective, preferring sectors with lower correlations to government bond yields and greater credit sensitivity, such as high yield and financials," said Matthew Farrell, investment specialist at London & Capital.

RISK BACK ON

U.S.-based fund managers increased their stock positions for the first time in four months to 56.3 percent, especially favouring the euro zone whose holdings hit a three-year high of 15.4 percent.

"Investors are seeing (the euro zone) as an area that has not really performed well along with the current equity bull market, and see it as now having an opportunity to catch up," said Alan Gayle, portfolio manager at RidgeWorth Investments.

European fund managers cut bond holdings to their lowest in nearly three years of 36.7 percent and boosted equities instead.

Among British investors, stock holdings jumped to 55.6 percent, the highest level since at least June 2012.

Japanese fund managers cut allocation to stocks and increased bonds in a bid to cut risks.

(Additional reporting by Jemima Kelly in London, Rahul Karunakar and Ashrith Doddi in Bangalore, David Randall in New York and Hideyuki Sano in Tokyo; Editing by Toby Chopra)

By Natsuko Waki