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Investors turning ‘reluctantly bullish,’ survey says

Investors’ appetite for market risk up in the first week of April, according to a survey of fund managers released by Merrill Lynch & Co. Inc. of New York.

Optimism about growth reached its highest level since early 2004, as 26% of respondents said they expected the global economy would strengthen in the next 12 months, up from -24% in March.

“Investors have moved from apocalyptically bearish to reluctantly bullish,” Michael Hartnett, co-head of international investment strategy at Banc of America Securities-Merrill Lynch Research, said in a conference call today.

“Still, we are not seeing that bull market euphoria. Most are still underweight in equities and cash levels are still high.”

The monthly survey involved 214 managers, representing $561 billion in assets under management, and was conducted from April 2 through April 8 by Banc of America Securities-Merrill Lynch Research with assistance from London-based global market research company TNS Global Worldwide.

Many of the managers who responded to the survey said they had shifted their investments.

The percentage of investors overweight in cash fell to 28%, down from 41% in the March survey. Also, the percentage of managers who said their portfolios were underweight in equities dropped to 17%, compared with 41% the previous month.

Investors reporting that their portfolios were underweight in bank stocks dropped to 26% from 48% in a March 6 to 12 survey.

Money is moving to emerging markets, the survey found. The percentage of managers that said their portfolios were overweight in emerging markets rose to 26%, up from 4% the previous month.

“Investors changed positions on emerging markets to play catchup with rising global equity markets,” Mr. Hartnett said.

Technology is now the most preferred global sector, he said.