Portfolio managers have become more comfortable with risk, and global equities have begun to recover from the market drop in late February, according to Merrill Lynchs April survey of fund managers.
Merrill Lynchs Composite Indicator for Risk Appetite jumped four points to 41 after dropping five points last month. The composite index was steady at 42 for several months prior to the March survey. As a result of the increased risk tolerance, global stock markets rallied 5% since the drop, according to the study.
The survey also found that 38% of respondents expect corporate profits to deteriorate over the next year, but a news release on the survey said investors continue to believe that equities are fairly valued and that companies are underleveraged.
Bonds are less popular than equities, primarily due to fears of inflation, the survey found, with a net 53% of respondents saying they are underweighting the asset class.
The survey was conducted April 5-12. A total of 214 fund managers participated in the global survey and 179 participated in the regional surveys.