More Evidence of Rotation Into Equities
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Today investors received more data suggesting a 2013 rotation out of bonds and into equities. The latest BofA Merrill Lynch Fund Manager Survey showed investors' bullishness reflects a growing confidence in economic recovery. A net 59 percent now expect the global economy to strengthen this year, compared to a net 40 percent a month ago. This marks the panel's most positive outlook since April 2010. An increasing proportion of respondents expect inflation to pick up as well.
"Following the resolution of the U.S. fiscal cliff, sentiment has surged. Half of investors now tell us that they would sell government bonds to buy higher-beta stocks, which is consistent with increasing growth and inflation expectations, and with our call for a 'Great Rotation' to start in 2013," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
Forty-nine percent of respondents now expect government bonds to be sold to fund purchases of higher beta equities and sustain the "risk on" rally. Last month, in contrast, only 37 percent saw the instrument as the likeliest source, noted the report.
"Following the resolution of the U.S. fiscal cliff, sentiment has surged. Half of investors now tell us that they would sell government bonds to buy higher-beta stocks, which is consistent with increasing growth and inflation expectations, and with our call for a 'Great Rotation' to start in 2013," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
Forty-nine percent of respondents now expect government bonds to be sold to fund purchases of higher beta equities and sustain the "risk on" rally. Last month, in contrast, only 37 percent saw the instrument as the likeliest source, noted the report.
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