Altair Asset Management Philip Parker's bold decision to liquidate his Australian shares funds and return the money to investors is highly contrarian. But his view that not all is well on the ASX is not.

While none have so far followed his lead in publicly quitting the market entirely, many in Australia's professional investment community appear to be quietly preparing for a downturn. 

According to the JPMorgan Fund Manager Radar, which assesses the public disclosures of major fund managers to deduce common themes, average cash holdings surged to 370 basis points in April, overtaking consumer discretionary stocks as the largest active position held by fund managers across any ASX sector in April.

This follows several months of increasing cash allocations.

"We do see the appeal [of cash] in a market where opportunities look increasingly constrained due to extended valuations (healthcare, industrials), structural concerns (banks, resources, retail) and style/franking limitations (REITS)," wrote JP Morgan equity strategist Jason Steed.

Mr Parker, a 30-year veteran of funds management, said he was cashing out and returning "hundreds of millions" in client money because he believed the overheated east coast property market, a Chinese debt bubble and overvalued equity markets would combine to spell a "calamity" for Australian equity investors.

"We think that there is too much risk in this market at the moment, we think it's crazy," he said. "Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision however preserving client's assets is what all fund managers should always put before their own interests."

Few share his dire predictions. But the increasing allocation to cash holdings shows concern is building among fund managers, said Beaumont Australian Equity Partners' investment director Julian Beaumont. 

Similarly, veteran fund manager Geoff Wilson, of Wilson's Asset Management, didn't quibble with Mr Parker's assessment that the market was headed for some kind of downturn. 

On the ASX - which has suffered a bad month with the S&P/ASX200 down more than 4 per cent and the big four banks on track to the worst May in 44 years - Wilson said "it's going to be a tough period".

"And that's with the backdrop of the biggest global market in the very mature stages of a bull market," he added, referring to Wall Street's record-breaking run.

But neither of those fund managers are exiting the field.

"We believe there are some real risks in large part of the economy, and we're positioning to avoid them," said Mr Beaumont. "But that doesn't mean there aren't opportunities in the Australian market.

"We're finding opportunities in domestic sectors that are growing defensively such as those providing healthcare or everyday consumer products. But more importantly, we're finding opportunities in companies doing well overseas.

"Some of their strong performance may owe itself to better economic conditions offshore, but most of it results because they have products or services that are succeeding offshore, and their businesses are enjoying strong growth by expanding into these offshore markets."

As for May's underperformance, "it's the top end that's really suffered," he said. "The top 20 stocks have fallen 6%, whilst the ex-20 market has actually held flat," he noted. "We're certainly not throwing our hands up. We're actually finding some good opportunities. In fact, valuations look quite attractive in certain parts of the market, especially outside the large caps."

Mr Wilson, whose main large cap equity fund is currently holding 32 per cent cash, viewed any downturn as an "exciting" opportunity to make some serious money. 

"People deciding to get their money back, well, that's their choice. But as a professional fund manager, my belief is everyone at Wilson spends all day trying to make money. That's the case in cheap markets and in expensive markets."

Philosophically, Mr Wilson said, it was his belief that times when equities looked stretched were the best time for fund managers to raise money. That's because a crash, when it comes, offers fantastic opportunities to buy companies trading at steep discounts.

"Significant market adjustments - whether it's the 1987 crash, the bursting of the tech bubble in 2000 or the global financial crisis - they create phenomenal opportunities for astute investors.

"Those three events were to me once-in-a-lifetime events where we could buy companies at, say 50% discounts to their cash backing."

Anyway, he added, if you're going to sell out, knowing when to do so is a fraught business. "The thing is, you can never pick the top or the bottom of the market," he said, before wryly noting the market's tendency to confound expectations. "The fact that everyone's negative means it'll probably keep going up in the short term."