Global investors have become increasingly optimistic about the outlook for the coming year but maintain a defensive strategy, the latest Bank of America Merrill Lynch (BofA ML) fund manager survey revealed.
According to the survey, conducted among 214 respondents with a combined AUM of €604bn (€492bn), asset have hiked their cash holdings to an average 5%.
Despite this defensiveness, the majority of respondents (60%), is now optimistic on the growth outlook for the coming year.
As the ECB is set to introduce its first programme of quantitative easing, the appetite for European equities has increased to a net 26%overweight, up from November’s net 8%.
“The prospect of ECB QE has brought growing consensus on European equities, but the weakening business cycle and falling commodity prices are working against true earnings recovery,” said Manish Kabra (pictured), European equity and quantitative strategist.
Following on from the results of the asset quality review, regional fund managers have raised their exposure to European banks. A net 13% are now overweighting the sector, compared to last month’s net 3%underweight.
Meanwhile, investors have less conviction towards U.S. and Japanese stocks. With the U.S. market appearing overvalued to a strong majority of respondents, a net 10% now intend to go underweight it in the coming 12 months.