Sentiment toward global equities strengthened significantly in January among money managers surveyed by Bank of America Merrill Lynch Global Research, with a net 55% overweight the asset class, up 15 percentage points from a month earlier.
Meanwhile, a net 54% of respondents were underweight bonds, compared to a net 47% in December, according to a news release detailing the survey’s findings.
“The combination of growth optimism and a benign view towards higher inflation provide a potent case for equity investment,” Gary Baker, head of European equities strategy at BofA Merrill Lynch Global Research, said in the release.
A net 72% of managers expect global inflation to increase over the next year, up from 48% a month earlier.
Manager sentiment improved for both the U.S. and Japan from December. A net 27% were overweight U.S. equities, up from 16%; and a net 5% were overweight Japanese equities, compared with 29% underweight in November. Also, 57% expect the Japanese economy to improve over the next year, up from 42% in December.
A net 44% predict the European economy will improve over the next year, up from 26% a month earlier.
In global emerging markets equities, the percentage of managers overweight the asset class dropped to a net 43% in January, down from 56% in November.
The survey of 199 fund managers, which oversee a total of $562 billion, was conducted Jan. 7-13.