Tags: BofA | risk | equities | favor

BofA/Merrill Lynch Survey: Equities Are in Favor Again

Thursday, 18 Oct 2012 10:05 AM

By Michael Kling

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Risk is back and equities are again in favor.

A monthly survey of 200 fund managers by Bank of America/Merrill Lynch reveals a net 24 percent of fund managers are overweight in equities, reports CNBC.

That's up from a net 15 percent September and the highest percentage in six months. More fund managers especially bullish on European and emerging markets. The portion of managers who are bullish on emerging markets increased from a net 19 to a net 32 percent in October, the largest monthly increase in eight months, according to CNBC.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

"Asian equities will start to perform better as some people start taking profits out of the U.S.," Graham Bibby, head of Richmond Asset Management, tells CNBC. “When we look at momentum — or which markets are rising the fastest — Asia’s picking up steam."

The outlook for equities is getting better due to central banks' monetary easing, Roman Scott of Calamander Group says.

"This very blunt tool of monetary policy to effectively keep money very cheap, in fact almost free, is designed to force all of us into risk assets,” he tells CNBC.

"[Federal Reserve Chairman Ben] Bernanke wants everybody to buy equities and risk assets. The European Central Bank wants the same thing. I do think there’s a good case that the risk-on position is looking more attractive."

On the other hand, the survey, which was conducted Oct. 5 to 11, indicates that fund managers are less bullish about U.S. equities. Only a net 10 percent of those polled are overweight on U.S. stocks, compared with a net 13 percent in September, fourth straight monthly drop.

Although the Dow approached a five-year high this month, experts say that nervousness about third-quarter earnings and profit taking could limit future gains.

However, according to The Wall Street Journal, Citigroup expects U.S. stocks to outperform global markets.

Citi strategist Tobias Levkovich predicts that the Standard & Poor’s 500 will hit 1,615 by the end of 2013, a 12 percent rise from the end of the third quarter, The Journal reports. By contrast, Citi has set a target of 360 for the MSCI All-Country World Index by the end of 2013, a 9 percent increase.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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