Survey Shows Fund Managers Upbeat On Recovery Prospects

by Carla Johnson, Investors Offshore.com

17 January 2002

The latest Merrill Lynch Fund Manager Survey has shown that the overwhelming majority of fund managers believe that the global economy is set to improve over the coming year.

Of the 273 fund managers surveyed, 86% said that they were optimistic about the economic prospects for 2002, up from 78% last month. Indeed, 70% are so optimistic that they expect interest rates to be higher in 12 months time. This compares to 56% in December, and just 19% in November.

The Merrill Lynch Chief Global Investment Strategist, David Bowers, explained: 'Fund managers expect some tightening of monetary policy over the next year. To be confident about the need for higher interest rates, you need to be very confident about the nature and sustainability of this recovery.'

There are, however, mixed feelings about how high the markets might go in 2002, with the number of fund managers predicting double digit returns down to 23% from 36% in November. The majority of respondents said that they were still intending to increase their equity exposure, although equities are no longer viewed as cheap following the limited upturn in this sector over the past few months. 'The easy money has been made and some of the euphoria of two months ago has worn off,' Mr Bowers observed.

According to the Merrill Lynch survey, the equity sectors most favoured by fund managers at the moment are technology, general industrials and basic industries, with food/drink/tobacco, utilities, and pharmaceuticals all waning in popularity.

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