Survey Finds Investors Like Global Equities, Remain Wary of U.S.

Investors gobbled up global equities in August and passed on American stocks.

And, over the last two months, fund managers have increasingly bought stocks, real estate and commodities, according to the BofA Merrill Lynch Survey of Fund Managers for August.

For the global equities markets, that’s a welcome sign at a time of soft markets. Trading volume has been light as investors remain skittish about equities following recent disturbing market events. These include the Aug. 1 Knight Capital trading snafu and botched IPOs earlier this summer.  

“Investor positioning does not indicate a major inflection point in the investment cycle," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.  "Bond allocations remain high and investors are shunning the most cyclical equity sectors,”

Even though the survey found bond allocations remain high and investors are shunning the most cyclical equity sectors, equity sales are rising. Twelve percent of managers now overweight equities compared with 3 percent being underweight in July.

The survey found investors most positive about Eurozone equities. Only five percent of investors want to underweight the sector. That’s down from 18 percent in July. However, the demand for U.S. equities is weak. About 9 percent of respondents looked to underweight  U.S. stocks in August, compared with 6 percent looking to overweight U.S. equities in July.

The survey found that investors have shifted their fears about a collapse in the EU and its sovereign debt situation to the growing concern about the U.S. "fiscal cliff." This refers to the combination of the expiration of temporary tax cuts and mandatory cuts in government spending. That’s slated to happen simultaneously at the end of 2012. 

The overall survey was based on responses from 232 panelists with $640 billion of assets under management between Aug. 3 to Aug. 9. A total of 173 managers, managing $491 billion, participated in the global survey. It included  a total of 119 managers, managing $277 billion, participated in the regional surveys.