By David Randall

NEW YORK (Reuters) - The rally in U.S. stocks since late June is prompting some mutual fund managers to prepare for a rocky September.

In part, the concerns are seasonal: September has seen more monthly declines of 5 percent or more in the S&P 500 than any other month since 1945 and is tied with August for the worst month in average returns overall, according to S&P Capital IQ.

Poor corporate earnings or outlooks for the upcoming year, mutual funds selling before the end of their fiscal years and reduced capital inflows all work against the stock market in September, said Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence.

Though volatility as measured by the CBOE Volatility index <.VIX> has fallen by half since late June, there are several triggers that could send the U.S. stock market down by 5 percent or more in September after reaching a string of record highs over the past two months, investors said.

The S&P 500 index <.SPX> is up about 7.1 percent for the year to date and, at around 17 times estimated earnings, is somewhat rich relative to its long-term price-to-earnings ratio of around 15, according to Thomson Reuters data.

"You've got a ton of things that should be disconcerting and there's ample reason for investors to be cautious heading into the fall," said Phil Orlando, chief equity strategist at Federated Investors in New York, who said his equity exposure was the lowest that it has been in years.

Among the concerns are the possibility that the United Kingdom sets in motion its exit from the European Union, that the Federal Reserve moves to raise interest rates and that the U.S. election could result in a Democratic landslide that would push Hillary Clinton too much to the left, he said.

"The current valuation of the market is not sustainable," said Ernesto Ramos, an equity portfolio manager at BMO Global Asset Management. Corporate earnings have fallen for five straight quarters, and much of the current rally is based on an assumption that energy companies have already seen the worst of the collapse in oil prices.

Ramos, who has to stay fully invested in the stock market because of his investor mandates, is staying away from traditional defensive sectors such as utilities or telecom because those sectors are trading at historically high valuations, he said.

Instead, he is moving more to industrial, financials and materials stocks that are cheap comparatively. Industrials, for instance, trade at a trailing P/E ratio that is 5 percent lower than the index as a whole, while financials trade at a valuation 21 percent lower.

"The only play out there in the market now is value stocks," he said.

(Reporting by David Randall; Editing by Cynthia Osterman)