Pension fund managers want companies to spend more on developing their businesses, rather than returning cash to shareholders through buybacks or dividends, according to a monthly report from Merrill Lynch. For the first time in the last 15 months, a Merrill Lynch survey of 290 pension fund managers showed that roughly 49% favor higher levels of spending for capital expenditures, while 37% are still in favor of cash returns. Roughly 10% reported that cash should be used to improve companies' balance sheets.
Consequently, about 17% of fund managers said they now plan to increase their exposure to U.S. equities, compared with 3% in October. Fund managers said they plan to fund the increase by reducing their allocations to Japanese equities.