Confidence among European and global fund managers is increasing, with many seeing European equities as undervalued as the macro landscape improves.
Emerging market equities were also seen as undervalued while US equities were considered overvalued.
Allocations to bonds were at an historical low and equity allocations, including Eurozone stocks, increased. However, slightly lower cash allocations remained relatively high.
The Bank of America/Merrill Lynch (BoAML) fund manager survey, which the bank produces each month, showed that:
- 81% of fund managers globally viewed US equities as “by far the most overvalued”
- 23% believed European equities were undervalued
- 44% said global emerging market equities were undervalued
- UK equities, with a 30% underweight, are now the most underweighted region globally for one year
Allocation to Eurozone equities increased to a net 27% overweight, up from 23% since the last survey.
Nearly 70% of European fund managers expected positive economic growth on a 12-month horizon, though BoAML warned that there could be complacency over the French elections.
The bank said fund managers’ views on the election were “more sanguine” than the bank’s view. Should Marine Le Pen win, “just” 27% of fund managers predicted a greater than 10% fall in the Eurostoxx.
Though confidence is said to be rising, the slightly lower level of cash allocations among European fund managers was still in line with the ten-year average, and above it for fund managers globally.
There were 165 participants in the global survey.
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