View more on these topics

Fund managers deny world ending

The world is no longer on the brink of an apocalypse. That at least is the view of global fund managers judged by this month’s Merrill Lynch survey.

Gary Baker, co-head of international investment strategy at Banc of America Securities Merrill Lynch, reports “a surge in global growth optimism”. Although there is no evidence of bullish euphoria, “the apocalyptic fear factor has been removed”.

Expectations for a surge in global growth, particularly in relation to China, are a key factor behind the surge. Manager optimism on the prospects for global growth is at a five year high, while expectations for Chinese growth are at their highest since 2003.

Baker says: “Optimism is largely focused on expectations of Chinese growth but it’s no longer just about the middle kingdom.”

The resurgence in optimism has led to a cyclical rotation, with a movement away from defensive sectors such as staples, telecoms and utilities. Managers have slashed their underweight positions in banks from a record 48% in March to 26%. “It’s just become too painful to sit on the sidelines with major defensive positioning,” says Baker.

Risk appetite has risen to a 12-month high. Asset allocators have reduced their underweight positions in equities and their overweights in cash.

Inflation is still seen as falling on a 12-month view, but not as sharply as in recent surveys.

Some 214 fund managers with a total of $561 billion (£377 billion) of assets participated in the survey. It was conducted with TNS, a market research company, from April 2-8.


Related Articles:
Manager optimism at three-year high

Recommended

Serve up higher net returns

As anyone involved in the financial planning sector will know only too well, nervousness over investing, a desire to retain access to liquidity and a general feeling of uncertainty over what the future holds, all have a huge influence in decision-making.

Martin Foden discusses how convenience is affecting the construction of fixed income portfolios

In this short video, Martin Foden, head of credit research at Royal London Asset Management, discusses how convenience is affecting the construction of fixed income portfolios. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment