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Alternative Market Briefing

Hedge fund investors migrating out of U.S. equities amid expectations of Fed rate hike

Wednesday, March 18, 2015

Komfie Manalo, Opalesque Asia:

Global investors have significantly decreased their U.S. equity allocations amidst concerns that the U.S. Federal Reserve will raise rates in the second quarter, according to the BofA Merrill Lynch Fund Manager Survey for March 2015.

According to the survey, some 19% of global asset allocators are now underweight U.S. equities – the biggest underweight since January 2008 and a big swing from a net 6% percent overweight in February. The proportion of investors saying U.S. equities are overvalued has reached its highest since May 2000 at a net 23%.

"Investor consensus suggests that the strong dollar will act as positive rather than a negative for the global economy and markets," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.

"Bullishness towards European stocks has reached uncharted territory. Demand for financials highlights confidence in domestic growth, while belief in European exporters is building on gains seen last month," said Manish Kabra, European equity and quantitative strategist.

Allocations to Eurozone and Japanese equities have both increased, but investors have indicated that the shift to Europe has only just begun. A net 63% of respondents say that Europe is the region they would most like to overweight in the c......................

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