According to Bank of America Merrill Lynch Fund Manager Survey for November, the ‘reluctant bulls’ have increased equity allocations to a net 52% overweight while upping their underweight in bonds.
At regional level, global emerging market equities returned to a net overweight position, while strong overweights in eurozone and Japanese stocks were trimmed.
While overall stocks were viewed as too expensive, European equities were still seen as undervalued compared with the US, a view given by net 18% of 222 respondents representing $599bn of AUM.
Emerging markets enjoyed a significant rise in investor confidence over corporate earnings this month, with net 44% expecting profits to improve over the coming year, compared with net 11% in October and September’s figure which saw net 8% expecting earnings to decline.
Over the last month, Korea has stolen some of China’s thunder, with GEM managers ramping their net overweight to the country by 34%, to 56% as China overweights were scaled back 45% to a net 11% amid fears of the global tailwind of a potential hard landing in China.
That said, China replaced Russia as favoured Bric market on a 12-month basis.
Broadly, 67% of investors said following the resolution of the US debt crisis they expected the world’s economy to strengthen over the next 12 months, up 13% since October.
Almost half the respondents (48%) expected the Federal Reserve’s tapering of asset purchases to commence in March 2014. Almost a fifth, or 18% believed it would not begin until Q2 2014.
