Money managers' outlook on Europe improved in February on the back of the European Central Bank's announcement that it would launch a program of quantitative easing, said Bank of America Merrill Lynch's monthly fund manager survey.
A net 81% of investors expect Europe's economy to strengthen in the next 12 months, the highest reading since 2009 and up 32 percentage points from January. Also, a net 51% reported Europe as the region they would most like to overweight in the next year, the highest reading since the survey was launched in April 2001 and up 33 percentage points from January. Inflation expectations are also improving against this backdrop. A net 29% of managers believe global corporate profits will improve over the next year, up 15 percentage points from last month.
Despite improved confidence in Europe, investors' outlook on global growth remains relatively unchanged, the result of declining expectations on China, the survey report said. A net 58% of respondents expect China's economy to weaken over the next year, the lowest reading since July 2013.
In terms of overall asset exposure, equity, commodities and cash holdings increased in February, while bonds decreased, the survey found.
A net 57% and 22% of respondents reported being overweight global equity and cash, respectively, while commodities allocations improved to a net 20% underweight vs. a net 24% last month. On the other hand, a net 55% of respondents reported being underweight fixed income, compared to a net 53% last month.
From a regional perspective, U.S. equity exposure decreased while emerging markets equity and U.K. equities increased.
A net 6% reported being overweight U.S. equities, down 18 percentage points from last month. By comparison, a net 1% and 17% reported being underweight emerging markets and U.K. equities, respectively, up from a net 13% and 24% underweight last month.
The survey of 196 fund managers managing a total of $559 billion was conducted Feb. 6-12.
