Managers offload European stocks
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Fund managers have ditched European equities in favour of America and Japan, according to the Bank of America (BofA) Merrill Lynch Global Fund Manager Survey for March.
The survey found that 21% of managers are underweight European equities, compared with 2% who were overweight in January. The lion’s share of the money went into American equities. Some 19% of the fund managers polled said they were overweight American equities–up from 1%. Japan has also gained popularity. While 10% were underweight Japan in January, 6% were overweight this month.
Gary Baker, the head of European equities strategy at BofA Merrill Lynch Research, says fund managers are less concerned about Greece. Yet European country risk remains “a key constraint to optimism over economic recovery”, he says in a statement.
Fund managers are more willing to embrace corporate risk, via equities, than sovereign risk, says Michael Hartnett, the firm’s chief global equities strategist.
According to the regional survey, 45% of European fund managers expect the region to grow over the coming 12 months. In January, 72% of them forecast growth. (article continues below)
Although American equities have surged in popularity, optimism among American fund managers has fallen, with 43% expecting the American economy to grow–down from 76%.
60% of European fund managers and 72% of American fund managers expect earnings to improve over the coming 12 months
The latest findings suggest that 60% of European fund managers and 72% of American fund managers expect earnings to improve over the coming 12 months. Both have reduced their cash levels.
European fund managers have reduced their underweight positions in banks, while their American counterparts have increased them. Both have turned to cyclicals, although European investors prefer basic resources and construction, while American fund managers prefer industrials and materials.
The findings of the global survey are based on the responses of 207 fund managers, managing a total of $589 billion (£388 billion). Some 165 fund managers with assets of $403 billion were polled for the regional survey. BofA Merrill Lynch Research and TNS, a market research company, conducted the survey from March 5-11.
