Allocators turn positive on Britain

Global asset allocators have taken their most positive stance on British equities for more than three years, according to the latest Bank of America (BofA) Merrill Lynch Fund Manager Survey.

In August a net 2% of asset allocators were underweight Britain, against a net 15% underweight in July – the least negative stance since May 2007.

Patrick Schöwitz, a European equity strategist at BofA Merrill Lynch Global Research, says the rise in popularity of British equities is hard to explain. “Either economic policies in the UK have cheered ­people up or it could just be a lack of alternatives,” he says. (article continues below)

This move into Britain was at the expense of America and Japan. In August a net 14% of allocators were underweight in America, down from last month’s 7% overweight, and the lowest level since January 2008.

“The US now seems to be the focal point of global growth worries,” says Schöwitz.

Meanwhile, Japan re-placed Britain as the most unpopular region, with a net 27% of allocators underweight in August, up from 11% last month.

For the first time since November asset allocators went overweight in eurozone equities in August, compared with a net 10% underweight position in July and a 34% underweight stance three months ago. In August allocators had a net 11% overweight position in the region.

Schöwitz describes the overall attitudes in the survey as “a cautious and careful consensus”. “It is not a survey that comes up with many macro conclusions,” he says.

Some 187 fund managers with a total of $513 billion (£327 billion) of assets participated in the survey. It was conducted with TNS, a market research company, from August 6-12.