Survey Shows Fund Managers to Take More Risks in 2010

A new study shows managers have a bullish outlook on equities, increasing their risk tolerance.

(January 20, 2010) — Global fund managers are allotting more cash for equities, taking above average risk relative to their benchmark, according to a Bank of America Merrill Lynch survey.

“This survey is one of the more bullish we have seen and suggests that investors buy into the idea that this recovery has legs,” Gary Baker, head of European equities strategy at BofA Merrill Lynch Global Research, said in a news release.

The January study revealed a net 2% of respondents are taking ‘higher than normal’ risk, compared to a net 7% taking ‘below normal risk’ in December 2009. According to the study, 52% of those surveyed are overweight equities, up from a month earlier. Additionally, 55% of respondents have no protection against a decline in equities in the next three months, an increase of seven percentage points from December.

The findings also revealed favor for Japanese equities, with 87% of those surveyed expecting improved earnings for Japan in 2010, up from 59% in November.

The study, conducted by BofA Merrill Lynch Global Research from January 8-14, surveyed 209 fund managers, managing $539 billion in assets.

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