Sat, Oct 25, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

BofA Merrill Lynch Fund Manager Survey finds renewed confidence in global equities

Wednesday, February 15, 2012
Opalesque industry update: Investors are showing renewed confidence in global equities amid radically improved market conditions and growing hopes of economic growth, according to the BofA Merrill Lynch Survey of Fund Managers for February.

Allocations towards equities have made the largest one-month leap since the beginning of 2011. A net 26 percent of asset allocators are overweight equities, up from 12 percent last month. Appetite for cyclical stocks, including Industrials and Materials sectors, has picked up while allocations towards defensive stocks, including Pharmaceuticals and Telecoms, have fallen. Investors have also reduced cash levels. A net 13 percent of asset allocators are overweight cash, down from a net 27 percent in January.

A majority of the panel now sees the world economy improving. A net 11 percent says the economy will strengthen in the coming 12 months – in December, a net 27 percent predicted a worsening economy. Investors also say that liquidity conditions and the ease of trading have bounced back. A net 32 percent of the panel assessed liquidity as “positive,” compared with a net 7 percent saying “negative” in January – the largest one-month improvement since the survey first asked the question in October 2007.

“Improved liquidity has aided this rally, but it’s important to emphasize that it also reflects improving economic sentiment. Hard economic data has to continue improving to sustain a recovery,” said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research. “The strongest indication of risk appetite is investors’ definitive move into cyclicals from defensive stocks and the closing of underweight positions in banks, especially in Europe,” said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research.

Emerging markets benefit from bounce in risk appetite

As risk appetite has risen, investors have bolstered allocations to emerging market equities. A net 44 percent of asset allocators are overweight emerging market equities this month, up from a net 20 percent in January. Demand for commodities has risen. A net 10 percent of global asset allocators are overweight the asset class, up from a net 5 percent one month ago.

A growing majority of 86 percent believes the Chinese economy is heading for a soft rather than hard landing. Only a net 2 percent of investors in Asia and emerging markets now believe China’s economy will weaken in the next 12 months, an improvement from a net 23 percent in January.

Looking ahead, a net 36 percent of the global panel says that they would like to overweight emerging markets more than any other region. Not only is this an increase on January’s reading, but investors have expressed that they would like to underweight all other regions, including the U.S.

Banks back in favor as concerns over Europe ease

European investors have returned in numbers to bank stocks in the past month as sentiment towards Europe has moved from the extremely negative positions recorded in January’s survey. A net 12 percent of European investors are now underweight banks – a positive swing of 38 percentage points from a month ago when a net 50 percent were underweight the sector.

Autos are at their most popular level recorded by the survey with a net 20 percent of investors overweight the sector, up 18 percentage points month-on-month. Investors have also reduced underweight positions in financial services and taken overweight positions in industrials and basic resources.

These moves come as global and regional investors ease skepticism towards Europe. Only a net 5 percent of the global investor panel says that the eurozone is the region they would most like to underweight, compared with a net 29 percent in January. BofA Merrill Lynch’s Growth Composite Indicator for the eurozone is at its highest this month since July 2011.

Investors yet to grasp Japan opportunity

Economic sentiment among Japanese fund managers has soared, but global investors have yet to make a concerted move back to Japanese equities. A net 81 percent of Japanese respondents expect the country’s economy to strengthen in the coming year, up from a net 47 percent last month. Globally, a net 23 percent of asset allocators retain an underweight position in Japan, down just 5 percentage points from January and higher than in December. Japan is now the least loved region in the survey for global fund managers, surpassing even the eurozone.

Bank of America

Press Release

BM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   

Banner

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  2. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  3. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  4. Goldman in talks to acquire IndexIQ[more]

    From Bloomberg.com: Can Goldman Sachs put ETF investors on a liquid diet? Goldman is in talks to acquire IndexIQ, Reuters has reported. Index IQ is a small exchange-traded-fund firm known mostly for products that replicate hedge fund strategies, called "liquid alternative" ETFs. While IndexIQ has 11

  5. Other Voices: CALPERS dilemma should be a warning to hedge funds wanting institutional investors[more]

    From Ian Hamilton, founder of IDS Group. A quick comment on the CALPERS’ disinvestment from the hedge fund market and the jitters it is causing. Pension Funds should not be sheep and follow CALPERS’ decision as the issues that CALPERS has with hedge fund investments are in many ways unique t