Fund managers return to Europe as growth confidence improves

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A net 45 per cent of portfolio managers – the highest since February 2011 – expect Europe’s economy to grow next year, according to June’s Bank of America Merrill Lynch European Fund Manager Survey.

Positioning in EU stocks has risen 14 points from an eight per cent underweight to a six per cent overweight as more portfolio managers expect European economy to grow.

With European stocks garnering more attention, there is now a stronger trend of ‘value positioning’ among portfolio managers with a favouring of cheaper sectors.

For instance, portfolio managers are favouring cyclicals and financials over staples and pharma with 18 per cent being overweight on banks – the highest since November 2006.

Despite eurozone equities seeing an increase in popularity, the global asset allocator’s view of UK equities is largely unchanged since the past two months with a net six per cent of portfolio managers being underweight on the country.

Additionally, portfolio managers are still largely underweight on utilities and retail with weightings of 48 per cent and 33 per cent respectively within the eurozone.

BofA ML European investment strategist John Bilton says: “Investors can now see a certain level of stability returning to Europe’s economy and positioning for a recovery has started.”

The BofA ML European Fund Manager Survey involved 124 panellists with total assets under management of $282bn, who were polled between 7 June and 13 June 2013.