Money managers have renewed optimism that the global economy will improve in the coming 12 months, according to the Bank of America Merrill Lynch August Survey of Fund Managers.
A net 15% said the global economy will get stronger in the next year, compared with a net 13% last month who thought the economy would weaken; that is the largest confidence jump since April to May 2009. Confidence in China is improving as well, with a net 14% saying its economy will improve in the next year, the highest percentage since November 2010.
Fewer managers expect corporate profits to fall, with a net 21% this month expecting such a decline, down from a net 38% last month.
Investors are also putting pressure on companies to return cash to shareholders. A net 43% said share buybacks and dividends are the most important use of cash flow, the highest level since November 2010.
Asset allocation has increased to real estate and equities; a net 5% are overweight real estate, the highest level since January 2007. A net 12% are overweight equities compared to a net 3% underweight last month. A net 3% said trading conditions are “good,” compared to a net 3% that said conditions were “poor” last month.
A total of 232 money managers with $640 billion in assets under management participated in the survey Aug. 3-9.