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A BofA-Merrill Lynch Fund Manager Survey for March 2013 has revealed that global fund managers are more positive on banks currently than at any time since December 2006, with a net 14 per cent moving to an overweight position in March 2013 – up eight percentage points month-on-month (m-o-m).
Investors are lowering positions in materials’ stocks, where a net 17 per cent are now underweight. Investors have also reduced exposure in the telecom sector to a net 28 per cent underweight. This represents the lowest level of appetite for this sector in more than seven years, findings suggest.
An overall total of 254 panelists with $691 billion of assets under management (AUM) participated in this survey from March 8 – March 14, which was done with the help of TNS, a market research company. A total of 198 managers, managing $578 billion, participated in the global survey. There was a renewed appetite for the technology space.
Asian region
Asian investors showed little conviction in terms of regional allocations this month. Sentiment on India and China deteriorated, while South Korea, Taiwan and Singapore showed modest gains, findings suggest. China (net nine per cent overweight) and India (five per cent underweight) saw the biggest monthly drops. In terms of sectors, Asian investors showed a preference for cyclicals.
In terms of sectors, autos still top the charts in terms of favoured industry, but fund managers also became more constructive on materials (although still an underweight), energy and industrials. Insurance, utilities and telecom stack up as the least favoured sectors, the survey findings suggest.
However, China growth expectations dropped sharply as hard landing fears resurfaced. Only a net 14 per cent of regional investors surveyed in March now expect the Chinese economy to be stronger in a year’s time, as compared to 60 per cent in February.
Investors also expect the US Dollar to appreciate over the next year, a 30-point increase in a month. Bearishness on US stocks has also reversed. The US also offers by far the best outlook of any region for corporate profits, investors believe.
Notes Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, “Relative US economic outperformance on the back of the housing market’s ongoing improvement and the energy independence story will lead a secular uptrend in the dollar. US equities’ leadership in the ‘Great Rotation’ suggests developed market equities are the likeliest winner in this scenario.”
European fund managers, on the other hand, have adopted a much more positive outlook for the region’s economy. A net 40 per cent now expects it to strengthen over the next year. This compares with a net 8 per cent two months ago, the findings suggest.
