Merrill: Fund Managers Defensive

Stimulus doesn't equal confidence among money managers.

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Merrill Lynch's monthly Survey of Fund Managers is gloomy again in November, but U.S. stocks are getting some love. Some takeaways:

  • Four out of five investors believe that the world will continue to experience recession over the coming year.
  • Forty percent believe that monetary policy is “too restrictive” and asset allocators remain overweight cash and bonds relative to equities.
  • Investors are in a "defensive asset allocation mindset" and "fear of deflation may be keeping them on the sideline."
  • Managers like U.S. equities because the outlook for corporate profits here is the “most favourable." A net 36 percent of asset allocators are overweight U.S. equities, which is "the most widespread exposure to U.S. stocks in more than a decade." They're underweight Europe and Asia.
  • Except for China. "A net 85 percent of panellists who focus on or emerging markets expect the Chinese economy to weaken in the next 12 months. At the same time, Asian and emerging market investors favour over any other country in their universe and have been moving into the market in force." A net 67 percent of regional respondents are overweight Chinese shares, reversing an underweight position just three months ago.
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    Merrill Lynch
    • Kirk Shinkle

      Kirk Shinkle is a senior editor for U.S. News Money and manages the Best Funds portal. Follow him on Twitter @KirkS or email him at kshinkle@usnews.com.

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