A majority of European managers polled by Merrill Lynch said they did not plan to reduce their holdings in sectors often seen at risk from a major computer crash, such as insurance, utilities and banks.
Insurers face exposure from claims and litigation in connection with computer faults while the operations of utilities and banks both depend on complex computer programmes.
While those who plan to cut their holdings are outnumbered by 38 per cent, a third of the 76 fund managers interviewed did not even rate the issue a consideration.
They also said they had rejected the options of adding low-risk government bonds or cash stocks to their portfolios or reducing exposure to smaller companies. The only action they planned to take was to increase their exposure to highly liquid equities to counter risks that markets will turn illiquid as consumers hoard cash.
Bryan Allworthy, European equity strategist at Merrill Lynch, said: "Investor solutions fall neatly into two camps: pre-emptive action by those who have looked into the issues and non-action by the rest."
The report came as Edward Yardeni, Deutsche Bank's chief economist in New York and author of Year 2000 Recession?, said he remained sceptical about businesses' success in tackling the problem.
Dr Yardeni said almost all those companies who claimed they were totally millennium-compliant were based on self-inspections.
"Some admit that such testing isn't even a reasonable option if they are running [24-hour-a-day] systems that can't be interrupted," he said, adding that only the UK and South Korea had programmes of independent verification and validation.
He said he still believed the Y2K issue could cause recession but said that most of the impact would come in the first six months of 2000. "I still believe there is a 70 per cent chance of a global recession next year caused mostly by weak links in the global supply chains of manufacturers relying on just-in-time deliveries of materials and parts from around the world."
He said that, despite publicity over successes in dealing with vital computer systems, no one was saying whether non-critical systems had been repaired or even considered the consequences of multiple failures of such systems.