Confidence in the world economy has improved, with seven out of 10 money mangers believing that the markets will improve in the next 12 months, according to the Merrill Lynch Survey of Fund Managers conducted in May 2009.
Average cash holdings have fallen from 4.9% to 4.3%, as portfolio managers moved into equities. And for the first time since last August, investors are at a net underweight position in bonds.
The number of respondents that said the economy will improve in the next 12 months increased to 57%, up from 26% in April.
The survey also indicates increased confidence in emerging markets. A net 46% of investors are overweight emerging market stocks, up from a net 26% in April. And, bullishness about China’s economy has reached its highest level since the survey began tracking China in 2003.
Michael Hartnett, Bank of America Securities-Merrill Lynch co-head of international investment strategy, confirmed that investors are buying equities, cyclical stocks and risky assets.
“This rush to take on risk, especially in emerging markets, is reminiscent of bubble-like behaviour,”he says. “A record net 40% of fund managers are looking to overweight the region in the next 12 months.”
Despite this growing global optimism in the capital market, asset allocators have yet to fully embrace stocks. A net 6% of asset allocators remain underweight equities globally, with significant underweight positions in Japan, the Euro-zone and the U.K.
While fund managers around the world are bullish, Canadian investors are still feeling weak-kneed about their economic situation.
According to the TD Canada Trust Personal Finance Survey released Wednesday, May 20, 77% of Canadians are worried about their short term personal finance. However, for their long term financial health, the majority (three quarters) are optimistic.
The TD survey also revealed that the top three financial concerns of Canadians are maintaining their current lifestyle (22%), coping with investment losses (18%) and having enough to retire on (16%).
The TD survey used a nationally representative sample of 1,014 men and women.
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