Fund Managers Taking on Risk at Beginning of New Year (BAC)

Investors’ appetite for risk has followed on rising sentiment on positive economic growth in the coming year. The Merrill Lynch division of Bank of America Corp. (NYSE: BAC) survey of fund managers for January shows that 55% of fund managers are overweight global equities, the highest level since July 2007.

Last month just 40% of fund managers were accepting more risk. In contrast, bonds are underweight a net 54%, up from 47% in December.

On inflation, 72% of investors expect inflation to rise this year, but only 42% of respondents think that inflation is a threat to profit growth. The survey shows that 39% of fund managers expect “above trend” growth in the next 12 months, and 57% think corporate profits will rise by more than 10%.

The chief global equity analyst at BofA/ML said:

Investors believe monetary easing is working; in the absence of either tighter policy or weaker data, equity enthusiasm looks contagious.

The full press release is here.