The majority of Australian share fund managers are heavily overweight to the "quality" end of the share market while few hold bias towards value stocks.
According to van Eyk's proprietary database of fund manager holdings, only six out of the 89 Australian share market strategies were found to be overweight value stocks by 5 per cent or more, compared to the benchmark.
This compared to 47 strategies which had a 5 per cent or greater overweight position on quality stocks with an average of 8.3 per cent.
van Eyk chief executive Mark Thomas said this position by fund managers had been the right strategy since the global financial crisis due to the fact that much of the rise in the market had been driven by only a handful of stocks.
According to Thomas, close to 80 per cent of the rise in the ASX200 index for the 12 months to February was driven by just 10 stocks.
"Investors who are still bruised by the bear market have naturally been crowding into stocks that have a history of good yields, strong balance sheets and solid dividends because they have been perceived as a safer exposure to shares," he said.
Thomas said the US STALSTOX index also supports the fact that investors are still not wholly convinced of the durability of the share market rally.
"This shows that the allocation to stocks is only about 45 per cent," he said.
"Remarkably, this is much lower than the 50-55 per cent during the depths of the GFC (and) suggests there is still a wall of money waiting on the sidelines."
Thomas also noted that the ratio of the performance of cyclical stocks to defensives appeared to be at a cyclical low and possibly a "historical extreme".
He said fund managers might be missing an opportunity to take a contrarian view due to investors' strong focus on quality.
