European managers believe Europe will enter a recession in the next 12 months, with 55% saying the region will suffer two quarters of negative growth, according to Bank of America Merrill Lynch’s September global fund managers survey.
Fourteen percent predicted two quarters of negative growth in the region as recently as July, according to the report.
The European debt crisis posed the largest risk for managers, according to 68% of survey respondents.
“The survey shows that sentiment on Europe is now so negative that contagion risk to the rest of the world has risen significantly,” Gary Baker, head of European equities strategy at BofA Merrill Lynch Global Research, said in a news release on the report.
Managers also are cutting down on risk, with 45% of respondents taking lower risk than normal relative to their benchmarks.
Global fund manager sentiment toward bonds improved in September, more than halving their underweight positions in two months to 21% from 45%.
The survey of 286 fund managers, overseeing $831 billion, was conducted Sept. 1-8.