The poll, comprised of 214 managers and released 16 December, found that 60% of participants are positive about the global economic outlook – almost double the figure of two months ago.
Conversely, managers are on the defensive and accumulating cash in their portfolios to the tune of 5% on average, with 28% of asset allocators overweight against their benchmarks – the survey's highest reading since June 2012.
European equities were marked as favourable by respondents, with 26% now overweight compared to 8% in November, reflecting the 63% that expect the ECB to implement increased quantitative easing in Q1 2015.
A further 19% said that eurozone equities are undervalued, while 13% of Europe-based fund managers are overweighting the sector, particularly in European banks.
Manish Kabra, european equity and quantitative strategist for BoA Merrill Lynch, said: “The prospect of ECB QE has brought growing consensus on European equities, but the weakening business cycle and falling commodity prices are working against true earnings recovery.”
The burgeoning US economy has led to a drop-off in investor conviction, with a majority deeming the market to be overvalued and 10% intending to underweight the sector in 2015.
The falling price of commodities, most notably oil, translated into a sharp drop in investor favour, with 26% of fund managers are currently underweight compared to 18% in November. The energy and materials sectors both underwent 19% underweight increases month-on-month.
A fifth of participants predicted that global consumer prices will rise over the next year, down from 35% in November, while 26% see global fiscal policy as too restrictive.
