The pessimism that sent investors running for government bonds and cash may finally be dissipating, a Merrill Lynch survey of global fund managers found, with a possible turn back to stocks.
“[A] widespread perception exists that stocks are cheap, both in absolute terms and relative to bonds,” the company wrote in a press release.
Forty-two percent of managers believe bonds are overvalued; 21 percent were overweight bonds in December, compared with 7 percent in November. Investors increased their overweight positions in four global sectors: health care, telecoms, utilities and consumer staples. Pharmaceuticals were popular with asset allocators, with 44 percent increasing their overweight positions in that sector.