Analysts at the Bank of Bermuda recommend an investment portfolio made up of 12 percent cash, 32 percent bonds and 56 percent equities.

"Both equity and bond weightings have been reduced given concerns regarding higher interest rates and global inflation with the backdrop of improving Asian economies,'' the bank's investment policy committee stated.

The recommendations were made on May 19 and published in the June issue of the company's World Watch month investment update.

The bank's analysts recommend a bond portfolio with a weighting of 37 percent invested in the US and Canada, 35 percent in Europe, ten percent in the UK, two percent in emerging markets, eight percent in corporate high yield and eight percent cash.

The portfolio recommendation marks an increase in the cash position, a reduction in the European market and an increase in US bonds.

The bank recommends an equity weighting of 50 percent in the US and Canada, 23 percent in Europe, ten percent in the UK, seven percent in Japan, three percent in Asia, three percent in emerging markets and four percent cash.

The portfolio marks an increase in the cash position, a reduction in US and European weighting and an increase in the emerging markets investment.

The bank stated that it's uncertain whether a correction has occurred in the high stock market growth being experienced in the US.

"We think the jury is still out, and maintain our slightly underweight position versus the index with the view of using our cash to increase technology exposure,'' the committee stated. "We feel that the current move into cyclicals is overdone as earnings growth rates do not justify the recent price appreciation, and could cause analysts to downgrade their ratings.

Finally, under-owned small cap stocks currently offer attractive valuations, thereby providing us with an opportunity to gradually diversify our portfolio to include this category.''