Global fund managers have lost significant confidence in the prospects for global economic growth and in the ability of corporations to improve profits, according to Bank of America Merrill Lynch's June Survey of Fund Managers.
Respondents predicting that the world economy will strengthen in the next 12 months fell to 24% in June, down 18 percentage points from a month earlier, according to a BofA Merrill Lynch news release.
At the same time, 28% of the respondents in June said they believed corporate profits would improve over the next year, down 19 percentage points from May. In addition, 42% of the respondents in June described liquidity as poor, up 20 percentage points from May.
The survey also said that investors had sold energy stocks in the face of the Gulf of Mexico oil spill, with only 7% retaining an overweight position in the sector in June, down 30 percentage points from May, the biggest monthly swing in energy the survey has recorded, the news release said.
The survey also said investors have tightened their defensive approach toward equities, moving out of cyclical sectors.
That shift has benefited secure-dividend sectors such as consumer staples, according to the survey, with 15% of respondents overweight staples in June, up 11 percentage points from the month before.
“Global growth expectations have ‘double-dipped' and positioning is more defensive but investors show little sign of panic,” said Michael Hartnett, chief global equities strategist at BofA Merrill Lynch Global Research, in the news release.