Money managers' outlook on European equity markets improved in September, said Bank of America Merrill Lynch's monthly fund manager survey.
Since the European Central Bank's decision Sept. 4 to cut rates, managers have increased their exposure to eurozone stocks.
A net 18% of respondents reported being overweight eurozone equities in September, up five percentage points from August.
Also, a net 48% of fund managers surveyed expect the Federal Reserve to hike rates in the second quarter of 2015, up from 38% in August, and a net 86% of respondents said the U.S. dollar will outperform the euro and yen in the next 12 months.
“This month's survey highlights the end of U.S. and European Central Bank consensus — and as the first Fed rate hike since 2006 draws closer, we'll see a new U.S. dollar bull market and movement out of bonds,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, in a news release.
The outlook on global growth dropped slightly in September. A net 54% of respondents expect the global economy to grow in the next year, down two percentage points from August, but down 15 percentage points from July.
In particular, sentiment toward U.K. equities worsened. As the vote on Scotland's independence looms, a net 16% of respondents reported being underweight U.K. equities.
Among the other asset classes, a net 47% of respondents reported being overweight global equities, up three percentage points from August. A net 60% and 14% reported being underweight bonds and commodities, respectively.
A net 22% of respondents reported being overweight cash in September, down from 24% in August. Average cash levels dropped to 4.6% from last month's high of 5.1%.
The survey of 202 managers with a total of $556 billion in assets under management was conducted Sept. 5-11.
