Fund managers' confidence in global economic growth remains high in April despite expectations of higher short-term interest rates, according to Bank of America Merrill Lynch's monthly fund manager survey.
Of the 239 respondents who manage a total of $674 billion in assets, a net 62% responded that the global economy will grow over the next 12 months, unchanged from March and higher than the 56% recorded in February's survey.
The bullish sentiment belies a significant increase from the previous two surveys of managers that believe higher short-term interest rates are coming — a net 66% expect higher short-term rates, compared to 55% in both March and February. Sentiment on long-term rates remains relatively flat, with a net 72% of respondents saying those rates will be higher in 12 months, down from 74% in March.
Sentiment regarding emerging markets also improved in April, following doubts that have sprung up since the beginning of the year due to geopolitical distress in countries such as Ukraine. A net 55% of managers surveyed believe emerging markets equities are undervalued, compared to 49% in March. Also, a net 2% want to underweight emerging markets equities, down from 21% in March.
The survey was taken between April 4 and April 10.
