Manager optimism not reflected in asset allocation

Global fund managers have become cautiously optimistic about prospects for global growth but this is not reflected in their asset allocations, according to the latest monthly survey from Merrill Lynch.

Gary Baker, the head of European equity strategy at Banc of America Securities-Merrill Lynch, says: “The macro environment is much more optimistic”. Less than a third say the global economy is in recession compared with two-thirds only two months ago.

But when it comes to allocating their cash, managers still appear nervous. The average cash holding increased from 4.1% this month—broadly in line with the long-tern average—compared with 3.5% in August. A net 18% of managers are overweight cash compared with 10% last month.

Sentiment has shifted away from their previous stance of being overwhelmingly in favour of emerging markets. “They are no longer the only game in town,” says Baker.

The second most popular region is the eurozone with managers taking a broadly neutral asset allocation.

Among sectors the most popular are technology followed by energy. The least popular positions are in discretionary followed by utilities.

Some 234 fund managers with a total of $667 billion (£405 billion) of assets participated in the survey. It was conducted with TNS, a market research company, from September 4-10.


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