By Ashrith Doddi(Reuters) - U.S. fund managers recommended increasing equity exposure in a model portfolio in May, a Reuters poll showed, raising allocations in mainly North American and British shares at the expense of those in the euro zone.The model portfolio for May comprised 55.4 percent in equity holdings, up from April's 54.7 percent. Bond holdings in the model portfolio was slightly down at 34.7 percent from 35.9 percent in the previous month.The increase in stocks comes against the backdrop of a global rally in equity markets, led strongly by European indices and a few in Asia.While the ECB's massive quantitative easing program and a string of positive economic data have pushed European indices up to near record-highs, Greek financial woes have halted that rally.Worries Greece might not reach a new deal with its lenders and default on its debts have gripped global financial markets.These worries pushed fund managers to lower recommendations for euro zone stocks to 9.2 percent of their global equity strategy, from April's almost six-month high of 11.4 percent.Meanwhile, U.S. Federal Reserve Chair Janet Yellen's comments that her bank might hike interest rates later this year has led fund managers to look for domestic options in all asset classes.Regional breakdowns showed fund managers raised their recommended allocation for North American stocks to the highest since November."While we are underweight bonds, we prefer the yield and quality in the U.S. markets to those overseas," said Alan Gayle, fund manager at RidgeWorth Investments.Regionally, funds made a massive increase to U.S. bond allocations -- to 76.4 percent from 69 percent -- as GDP data for the first quarter due later on Friday is expected to show a 0.8 percent contraction. (reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=USGDPP%3DECI)Euro zone bond allocation was reduced to 8.9 percent from 10 percent.Within the fixed-income portfolio, fund managers have increased their recommended allocation into high yielding paper at the expense of investment grade credit.The highest allocation is still in government securities, which make up 41.6 percent, up slightly from 40.8 percent of the total portfolio.Other changes include a cut to Japanese bond allocations by 4 percentage points and a minor cut in Japanese shares to 4.8 percent from 5.8 percent in the previous month.Global poll wrapup (ASSET/WRAP)Europe poll story (EUR/ASSET)UK poll story (GB/ASSET)Japan poll story (JP/ASSET)China poll story (CN/ASSET)(Polling By Swati Chaturvedi and Khushboo Mittal; Editing by Toby Chopra)Join the conversation about this story »
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