Financial advisers are becoming increasingly bullish on the UK stock market's prospects as the domestic economy shows signs of improvement, according to FE.
IFAs who sit on the FE Adviser Fund Index panel recommended increased exposures to UK equity for investors of all risk appetites in the August 2013 twice-yearly rebalancing.
Panellists also advised cautious investors to scale back on fixed interest.
The FE AFI Aggressive Index increased its UK equity exposure to 31.18% in the August 2013 rebalancing from 28.80% six months ago, in reaction to increased consumer spending, rising house prices, and an improved outlook for UK PLC.
Several UK equity funds featured within the top 10 fund picks for aggressive investors, in order of preference: AXA Framlington UK Select Opportunities, Lindsell Train UK Equity, Standard Life Investments UK Equity Unconstrained, JOHCM UK Opportunities and Liontrust Special Situations.
Meanwhile, the FE AFI Balanced Index increased its UK equity exposure to 28.80% from 25.72%, while the FE AFI Cautious Index moved to 25.6% from 21.97%.
The two most popular funds for high risk investors were First State Asia Pacific Leaders and Aberdeen Emerging Markets.
These were also among the top three choices for aggressive investors in the last two rebalancings, in February 2013 and August 2012, and have retained their popularity despite recent lacklustre performance from emerging markets in general.
FE research analyst Oliver Clarke-Williams said: "Aberdeen Asset Management and First State Investments are undoubted leaders in Asia and emerging markets, but have started to soft close some of their largest funds.
"For investors seeking other options in Asia, we rate Schroder Asian Income, Schroder Asian Alpha Plus and Newton Asia Income, all of which are included in our FE Select 100 list of the best funds."
In addition to Schroders and Newton, other Asian and emerging market funds within the AFI Aggressive Index included GAM Star China Equity, Jupiter Global Emerging Markets, Jupiter Emerging European Opportunities and Lazard Emerging Markets.
Meanwhile, Standard Life Global Absolute Return Strategies was the top pick for medium risk investors, followed by Jupiter Strategic Bond, M&G Optimal Income, First State Asia Pacific Leaders and Lindsell Train UK Equity.
The FE AFI Cautious Index's top five fund picks all had an income element: Jupiter Strategic Bond, Newton Global Higher Income, L&G Dynamic Bond, M&G Optimal Income and M&G Global Dividend.
The largest asset allocation shift since February involved cutting fixed interest to 34.78% from 38.27%.
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