Money managers outlook on global growth improved in November, said Bank of America Merrill Lynch’s monthly fund manager survey.
A net 47% of investors expect the global economy to strengthen over the next 12 months, up 14 percentage points from October. Also, a net 42% of respondents believe global corporate profits will improve over the next year, up 15 percentage points from last month.
Accordingly, investors are reducing their cash holdings and increasing their allocations to equities. A net 13% of respondents reported being overweight cash in November, down 14 percentage points from previous month. A net 46% of respondents were overweight equities, up 12 percentage points from October.
Money managers’ outlook on Japan also improved in November. A net 45% of respondents reported being overweight Japanese equities, up 13 percentage points from October and up 22 percentage points from September. Also, a net 27% of investors say Japan is the region they are most likely to overweight in the next 12 months, the highest reading since April 2006 and up 13 percentage points from October.
“Deflation might be in the back of investors’ minds, but taking on risk, especially in equities, in Japan and in the dollar is at the forefront of their thinking,” said Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch Global Research, in a news release.
Sentiment regarding European equities was mixed. A net 8% reported being overweight European equities, up four percentage points from last month. However, some investors have also said they would like to underweight the region in the next 12 months.
“European stocks were recently boosted by the best earnings season in three years. However, concerns over longevity of growth and deflation continue. Three wise themes of yield, quality and large cap are the best places to hide in European stocks,” said Manish Kabra, European equity and quantitative strategist at Bank of America Merrill Lynch, in the news release.
The survey of 214 fund managers managing a total of $569 billion was conducted Nov. 7-13.