Fund managers turning to US and emerging markets

Fund managers are turning away from eurozone woes towards US and emerging market equities, according to the latest BofA Merrill Lynch survey.

The survey found that fund managers had “slightly increased” since its October survey.

According to the poll, the proportion of investors with a US equities overweight rose to 20% from 6% in October. Global emerging markets equities exposure also jumped to 27% from 6% in October.

The monthly poll found 28% of respondents believe they would like to overweight emerging market equities, while 18% prefer the US. The results also found 29% would opt to underweight the eurozone.

Gary Baker, head of European Equities strategy at BofA Merrill Lynch Research, says: “European growth concerns are more intense but sentiment looks to be close to rock bottom – unless Europe’s problems spread to the rest of the world.” (article continues below)

The poll also revealed that the proportion of Europeans forecasting regional recession had almost doubled to 72% in November, while 31% expected a global recession would be avoided.

Fears of a global recession have eased. A net 31% of investors expect the world economy to avoid a recession, up from a net 25 percent last month.

Michael Hartnett, chief global equities strategist at BofA Merrill Lynch Research, says: “Investors are showing belief in emerging market growth and US resilience, which is key to retaining positive global sentiment.”

A further 78% of respondents expected a soft landing for the Chinese economy, delivering better than 7% growth during the year.

The survey found 59% of Asia Pacific (ex-Japan) respondents expected inflation to fall in the coming year.

Overall, 258 panelists with $665 billion of assets under management participated in the survey between 4-10 November. A further 188 managers, participated in the global survey and 144 managers took part in the regional surveys.

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