Investors’ appetite for risk has followed on rising sentiment on positive economic growth in the coming year. The Merrill Lynch division of Bank of America Corp. (NYSE: BAC) survey of fund managers for January shows that 55% of fund managers are overweight global equities, the highest level since July 2007.
Last month just 40% of fund managers were accepting more risk. In contrast, bonds are underweight a net 54%, up from 47% in December.
On inflation, 72% of investors expect inflation to rise this year, but only 42% of respondents think that inflation is a threat to profit growth. The survey shows that 39% of fund managers expect “above trend” growth in the next 12 months, and 57% think corporate profits will rise by more than 10%.
The chief global equity analyst at BofA/ML said:
Investors believe monetary easing is working; in the absence of either tighter policy or weaker data, equity enthusiasm looks contagious.
The full press release is here.
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