Increased optimism feeding investor risk appetite

A survey released Thursday finds optimism about global economic growth has reached its highest level since 2004, and risk appetite has started to pick up.

In contrast to March, investors are starting to act on the improving outlook and are unwinding previously-entrenched, bearish positions, according to the Merrill Lynch Survey of Fund Managers, which polled more than 200 fund managers managing a total of $561 billion, from April 2 to April 8. A vital difference is that investor pessimism on bank stocks has started to recede.

The net percentage of investors overweight in cash fell to 28 percent from 41 percent in March. Just 17 percent of respondents are underweight in equities compared with 41 percent in March. The survey indicates asset allocators are turning toward cyclical sectors, like technology.