Fidelity's £31.7bn multi-asset team has returned to a neutral stance on equities having held a contrarian overweight position since the start of the year.
Dialling down risk across its seven portfolios, Fidelity chief investment officer James Bateman believes markets are "getting ahead of themselves" by pricing in dovish expectations.
He said: "Looking back on the first quarter of 2019, the defining story was clearly the strong performance of risk assets."
Having suffered its worst quarter since 2008, the S&P 500 witnessed a reversal of fortunes, with Q1 2019 its best quarter since the recovery started in 2009.
But he added: "Global economic fundamentals have continued to deteriorate despite markets rallying, and this has led us to return to a neutral view on equities overall, after moving overweight in January."
The multi-asset team is also maintaining its exposure to duration assets in the form of US Treasuries, gilts and Australian government bonds, each of which has defensive qualities it prefers to those of cash.
Bateman said despite equity markets being back towards their all-time highs seen last year, the current rally was not sustainable without more positive signs in fundamentals, which he said had not yet materialised.
Rather than running away from risk assets, investors had been focused on a suggested resolution of the US/China trade dispute and policy responses from the leading central banks.
"The Fed has moved more solidly dovish, and the European Central Bank is trying its best, but this may be more ‘dovish-damage-control' than stimulus.
"Meanwhile, China is responding to its weakest annual growth figures since 1990 with coordinated policy support, albeit at muted levels relative to the ‘big-bang' stimulus of recent years."
He added that markets "may be getting ahead of themselves by pricing in dovish expectations", adding that investors were getting used to policymakers stepping in to "save the day", forgetting they were only doing so because of economic weakness.
Bateman added that improved data was required in order for Fidelity to put more risk on the table, adding that "calls for green shoots seem premature".