Fund managers reduce euro exposures worldwide, says Merrill Lynch survey

Global managers are reducing exposure to the Eurozone, and looking to policy makers for stimulus, according to a survey by Bank of America Merrill Lynch.

“With Greece and risks surrounding eurozone sovereign bonds at the forefront of investors’ minds again, respondents are reducing exposure to the euro. A net 32% of investors are underweight the euro (unhedged), a significant increase from a net 20% in April and March.

“Looking ahead, a net 49% of global investors say that the euro is the currency they most expect to depreciate over the next year, up from a net 32% last month,” a statement from BofA Merrill Lynch said. Nearly two-thirds of investors are concerned that Greece will be the source of a negative surprise this year, up sharply from 48% in April.

The global survey portion of the BofA Merrill Lynch Survey of Fund Managers for May, which took place from May 4 to May 10, polled 173 managers from Europe, the US and emerging markets with a total of $526bn assets under management.

Meanwhile growing numbers of managers are expecting, and encouraging, government stimulus. The proportion of global investors saying global fiscal policy is “too restrictive” has more than doubled to a net 23% from a net 11% in April, while the number of respondents saying global monetary policy is “too stimulative” fell to a net 14% from a net 25%.

60% of respondents expect the ECB to engage in more direct large-scale quantitative easing by the end of 2012 – up from 51% taking that view in April.

“Investors have eradicated hopes of growth and inflation that had built up in the early months of the year – and they are looking to policy makers for stimulus,” said Gary Baker, head of european equities strategy at BofA Merrill Lynch Global Research. 

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