EUROPE/GLOBAL – Fund managers are becoming increasingly bullish about the prospects for the global economy, but would like to see an easing of European monetary policy, according to the latest Merrill Lynch Fund Manager Survey, released today (Aug 14).

The survey of 268 fund managers reveals that 56% believe the global real economy will develop positively over the next 12 months, against 40% last month.

However, a record number of managers (79% compared to 69% last month) are worried that the monetary policy of the European Central Bank is presently too restrictive and needs easing.
Asked where the ECB would be in six months time, 46% of the respondents said it would be ‘behind the curve’, the survey records.

Fears of a recession in Germany are also preoccupying the minds of eurozone fund managers. More than 60% predict that the probability of Germany falling into recession is 30% or higher. One in six put the probability at 50% or higher.

“ Despite the summer doldrums, institutional investors are convinced that the market will move higher, says David Bowers, chief global investment strategist at Merrill Lynch.
“ More fund managers than ever say they are passionate about equities and are getting ready to move out of a defensive position.”

The survey notes that fund managers are also seeing a shift in investment style, with 46% saying growth investing will be the most successful going forward, compared to 39% who opt for value investing. The majority (60%) think large cap stocks will outperform, while 29% prefer small cap stocks.