Fund Managers Worried About Risks, But Bullish on China
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According to the September edition of the Bank of America Merrill Lynch Fund Manager Survey released Tuesday, global investors are wary of risk, but are less concerned with a slowdown in China.
The data showed that fund managers are bearish on their outlook for developed market after turning to them over the summer, but are showing positive sentiment in China over the next year. Last month, investors were most bearish on U.K. equities than at any time in the last three years, as the pullback in Europe dropped off.
"A net 11 percent of respondents believe that the Chinese economy will strengthen over the next 12 months -- a 30% swing (from August) and the largest positive monthly change since May 2009," the survey said.
This month, a net 20 percent of fund managers are overweight compared to their relative benchmark, which is double the total of those holding the asset in the previous month.
The group of fund managers surveyed turned bearish on the U.S., U.K. and Europe, turning to China and other emerging markets. This positive sentiment in emerging markets boost signs of growth continuing in these regions after sentiment had stalled in recent months.
“Investors are evenly split on whether the global economy will improve over the coming 12 months, with more than three-quarters anticipating a world of below trend growth and inflation. There was a notable drop in expectations for corporate margins.”
The survey showed that in terms of asset allocation, 10 percent of managers were overweight equities, compared to 12 percent in August and 11 percent in July. In April, 52 percent of the fund managers surveyed showed an overweight position on equities when the U.S. indexes posted highs for 2010.
A net 15 percent of the surveyed fund managers are underweight bonds for September, compared to 23 percent in August., while 19 percent see gold as overvalued, compared to 14 percent in August.
The data showed that fund managers are bearish on their outlook for developed market after turning to them over the summer, but are showing positive sentiment in China over the next year. Last month, investors were most bearish on U.K. equities than at any time in the last three years, as the pullback in Europe dropped off.
"A net 11 percent of respondents believe that the Chinese economy will strengthen over the next 12 months -- a 30% swing (from August) and the largest positive monthly change since May 2009," the survey said.
This month, a net 20 percent of fund managers are overweight compared to their relative benchmark, which is double the total of those holding the asset in the previous month.
The group of fund managers surveyed turned bearish on the U.S., U.K. and Europe, turning to China and other emerging markets. This positive sentiment in emerging markets boost signs of growth continuing in these regions after sentiment had stalled in recent months.
“Investors are evenly split on whether the global economy will improve over the coming 12 months, with more than three-quarters anticipating a world of below trend growth and inflation. There was a notable drop in expectations for corporate margins.”
The survey showed that in terms of asset allocation, 10 percent of managers were overweight equities, compared to 12 percent in August and 11 percent in July. In April, 52 percent of the fund managers surveyed showed an overweight position on equities when the U.S. indexes posted highs for 2010.
A net 15 percent of the surveyed fund managers are underweight bonds for September, compared to 23 percent in August., while 19 percent see gold as overvalued, compared to 14 percent in August.
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