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BofA Merrill Fund Managers Most Bullish

Bullishness among fund managers towards global equities is at the highest level since Merrill Lynch began surveying them in April, 2001.

BofA Merrill Lynch said a net 67 percent of asset allocators say they are overweighting global equities, up from 55 percent in January and 40 percent in December. The survey also shows a big rotation away from emerging market equities, with only a net 5 percent of fund managers overweight emerging markets, down from 43 percent in January.

The beneficiaries were U.S. and European markets. Interest in U.S. stocks increased with 34 percent overweighting U.S. stocks, up from 27 percent in January and 16 percent in December. European overweights went from 9 percent in January to 11 percent in February.

Merrill says investors were confident in the global economy and corporate profits but they have moved up their expectations for a U.S. rate hike. Now 70 percent see the Fed raising rates in the next year, compared to 62 percent in January.

At the same time, bond and cash allocations fell, with a net 66 percent underweight bonds, up from 54 percent in January. Nine percent were underweight cash, the lowest allocation since January, 2002. There is also the biggest divide between equity and bond underweights since the survey began.

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