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More Than 80% of Fund Managers See December Rate Hike: Poll

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With growth and inflation expectations notably higher after new U.S. payroll data, the vast majority of investors in Bank of America Merrill Lynch’s November fund manager survey expect the U.S. Federal Reserve to raise rates this quarter.

Eighty-one percent of respondents said they expected a rate hike, up from 43% in October.

A total of 201 panelists with $576 billion of assets under management participated in the survey from Nov. 6 to Nov. 12.

The poll found that the percentage of asset allocators overweight equities rose by 17 percentage points from October to a net 43%, while those overweight cash fell to 4.9% from 5.1%, their lowest level since July.

Allocations to real estate rose to a 12-month high, a net 11% overweight.

In contrast, investors maintained aggressive underweights on commodities, a net 23%, and global emerging markets, net 31%.

The November survey found that investors’ confidence in the global economy had rebounded. Net expectations of its strengthening in the next 12 months were up 22 percentage points from October.

Concerns about a slowdown in China eased as well, with only 4% expecting a weaker economy over the next 12 months, down from 22% in October.

Similarly, 52% of investors expected Chinese GDP growth of between 6.1% and 7% in three years’ time, up from 28% last month.

Eurozone and Japan strengthened in November as global investors’ most favored equity markets globally (overweight 58% and 28%, respectively), reflecting deeper consensus on the U.S. dollar, according to BofA Merrill Lynch.

A net 67% of respondents said they now expected the currency to appreciate in the next year.

“While European equities are loved by global investors and the [European Central Bank] has created some excitement about growth, sector positioning shows local asset managers are lacking conviction and hugging their benchmarks,” said Manish Kabra, head of European quantitative strategy.

— Check out Fund Managers Chilling Out About China, See No Fed Rate Hike in 2015 on ThinkAdvisor.