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RPT-POLL-U.S. funds favor bonds over stocks as economic cycle ages

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* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/asset-allocation-polls?s= 6 J & s t = G poll data

BENGALURU, Oct 31 (Reuters) - U.S. fund managers increased recommendations for bond holdings in their model global portfolio to a five-month high in October on expectations the current economic cycle is nearing its end, a Reuters poll showed.

The monthly survey of 13 U.S.-based asset managers taken Oct. 16-30 showed global bond allocations accounted for an average 35.1 percent, up from 34.8 percent the previous month, and the highest since May.

Stock allocations were held steady at 56.7 percent, with the remainder spread among cash, property and alternative investments.

World stocks have hit a series of record highs this year with the global economy on its best roll in years, pushing major central banks to shift their bias away from policy easing.

While the current equity bull market is in its ninth year, recommended allocations to stocks have held below 60 percent and bonds above 30 percent in the Reuters U.S. Asset Allocation Poll for over four years - a reversal of the previously more common split in model global portfolios.

Several U.S.-based global fund managers said that recent composition has performed almost as well as an all-stock portfolio, with less risk.

Worries that several developed economies are at a late stage in the current economic cycle - the U.S. expansion is already almost 100 months old - and expectations that inflation is not set to accelerate have boosted their preference for bonds.

"Once you start to look through the smooth macro surface at the underlying risks and uncertainties, there are a few problems that might pop up even over the short-term cyclical horizon and upset the eerie calm in financial markets," said a fund manager at a large U.S. investment firm.

"The most important macro uncertainties 'the ABCs of caution' are the aging U.S. economic expansion and the coming end of central bank balance sheet expansion."

They also expect the current run-up in the equity market to grind higher based on continued global growth, even as they worried the move away from easy monetary policy by major central banks could weigh on global stocks.

"In 14 of the past 15 Federal Reserve rate hiking cycles - dating back to 1965 - equity valuations contracted during the 12 months following the initial hike. Clearly, it hasn't happened this time around and instead valuations are near all-time highs," added the fund manager.

"Meanwhile, volatility is at an all-time low amid one of the longest economic expansions on record, at the same time that central bank accommodations are waning."

Global wrap-up: Europe poll story: UK poll story: Japan poll story: China poll story: (Additional reporting and polling by Rahul Karunakar and Indradip Ghosh, editing by Larry King)