| BofA Merrill Lynch Fund Manager Survey Finds Investors Displaying Growing Conviction in Growth |
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Portfolio Managers Indicate That QE Era Is Coming to an End A net 28 percent of investors expect the world economy to strengthen in the coming 12 months – a large increase from a net 11 percent in February. As recently as January, the majority of respondents predicted that the economy would weaken. Eurozone confidence has risen – this month sees an even split between those expecting a stronger or weaker eurozone economy. In February, a net 35 percent predicted the economy would deteriorate. Investors are more optimistic about corporate profits. A net 6 percent of the panel expects corporate profits to improve in the coming year. A month ago, a net 11 percent predicted profits would decline. Fewer investors expect the U.S. Federal Reserve (Fed) to engage in further QE. Nearly half of the panel (47 percent) expects no further QE in the U.S., up from 36 percent in February. Thirty-nine percent predicts the “The prospect of higher inflation reflects a victory of central banks in the war against deflation. Risk appetite is rising with hedge funds more active, but cash is still on the sidelines to put to work,” said Attention shifts to developed economies from emerging markets Growth prospects in Global investors hold far fewer fears about the eurozone. The numbers naming EU sovereign debt as their number one “tail risk” have declined sharply to 38 percent this month from 59 percent in February. Investors within the eurozone are both more bullish about growth and far less worried about corporate profits. A net 7 percent expects corporate earnings in the eurozone to deteriorate in the coming 12 months, down from a net 39 percent in February and a net 84 percent in December. A net 29 percent of U.S. investors say the U.S. economy with get stronger in the year ahead, up from a net 15 percent in February. Japanese fund managers are the most bullish with a net 91 percent saying that Japan’s economy with strengthen, up from a net 47 percent two months ago. While Global Emerging Markets remain the most popular region, concerns about China’s growth prospects have increased. A net 9 percent of respondents say China’s economy will weaken in the next year, up from a net 2 percent in February. Sentiment within Furthermore, inflation concerns have risen significantly among Banks gaining momentum – U.S. underweight position disappears Banks and financial services companies have enjoyed a second month of popularity among investors as allocations towards equities have risen. The proportion of global asset allocators underweight banks has fallen 11 percentage points month-on-month to a net 14 percent. U.S. investors are now collectively neutral on banks with a net zero percent over/underweight this month. Two months ago, a net 16 percent were underweight banks. In Technology remains comfortably the top sector globally, but it has also enjoyed a surge in popularity among Europeans. A net 33 percent of eurozone investors are overweight technology, up from a net 10 percent in February. The sector has overtaken automotives/parts to become the region’s most popular. Survey of Fund Managers An overall total of 278 panelists with For more  Source: |
