FUND VIEW-UPDATE 1-Fortis bullish on equities, high-yield bonds

* Fortis overweight on high-yield bonds, equities

* Reducing exposure to investment-grade corporate bonds

* Overweight on equities in China, Indonesia and Russia

* Sees volatile markets in 2010 (Updates to add details, comments)

HONG KONG, Nov 4 - Fortis Investments is bullish on equities and high-yield bonds, despite significant rallies in both asset classes, as it sees a continued recovery in the global economy amid a low interest rate environment, said a top executive.

But the Dutch fund manager had been reducing its exposure to investment-grade corporate bonds, where spreads had been tightening, said William De Vijlder, global chief investment officer.

"We are not concerned about the recent choppiness; the markets are still in the sweet spot of continued recovery and easy monetary policies," said De Vijlder.

Fortis <FOR.BR>, which had $233 billion in assets under management as of the end of June 2009, is fully overweight on emerging market equities, with a focus on China, Indonesia and Russia, and is betting on emerging market debt, he said.

Emerging markets, however, remained highly correlated to their developed peers and were likely to suffer more when U.S. investors became jittery, said De Vijlder.

"Emerging equities are still essentially a beta play. The macro-economic risk has reduced but the financial risk hasn't," he said.

Fortis, which typically prefers European equities over those in the U.S., has neutralised its stance on the two markets as it sees U.S. investors as less "risk-loving" and expects the market to be less volatile.

RIDING THE 2010 ROLLER COASTER

De Vijlder expects a volatile year for global markets in 2010 with investors staying "twice as vigilant" for signs of weakness in the economy and corporate earnings.

"The markets will end 2010 above where they start the year, but we will see a lot more volatility, much like the Japanese markets in the 1990s," said Brussels-based De Vijlder. "Information flow is likely to be ambivalent, unlike this year where we were coming out of a situation of utter despair."

Investors would focus on shorter investment horizons, amid low visibility on the economic and financial environment, said De Vijlder.

The global appetite for equities may be damped by signs that leading economic indicators from the U.S. have been worsening or if lagging indicators like jobs data do not continue to improve.

Global stocks slumped and crude oil fell late last week after reports showed U.S. consumers cut spending in September, while sentiment turned lower in October, fanning skepticism about an economic recovery.

De Vijlder oversees 40 investment centres globally, including BNP Paribas' fixed income & currencies, equities and alternative & solutions teams.

But there were insufficient arguments to persuade investors to exit stocks at present, he said.

"People have the tendency to chase trends ... lets grab the risk premium and then see what happens later," said De Vijlder.