Confidence in Equities Reaches 10-Year High

BofA Merrill survey finds optimism on the part of money managers

Money managers are more bullish on global stocks this month than at any time in the past decade, according to a BofA Merrill Lynch Global Research survey.

Bloomberg reported a net 67% of respondents, who together manage $569 billion, had an “overweight” position on global equities, the highest level since the survey first asked the question in April 2001. That compares with 55% in January and 40% in December. Meanwhile, a net 9% is “underweight” cash, the lowest allocation since January 2002.

The February survey “is one of the most bullish in years,” Gary Baker and Michael Hartnett, equity strategists at BofA Merrill Lynch, wrote in a report on Tuesday. “Surging inflation expectations show we are no longer in a Goldilocks environment and a meaningful tactical correction in risk assets could be caused by a jump in interest rates or weaker U.S. growth.”

According to Bloomberg, a net 34% of survey respondents are now “overweight” U.S. equities, up from 27% in January. Appetite for euro-area stocks has also risen, to net 11% “overweight” from 9% “underweight” in January. Meanwhile, February saw the biggest decline in emerging-market exposure in the survey’s history, with net 5% of managers now “overweight” global emerging-markets equities, down from January’s 43%.

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