Investors bet on 2015 Federal Reserve interest rate hike as they pile cash into stocks and real estate – Bank of America Merrill Lynch’s fund manager survey
Investors are gearing up for an imminent US interest hike and are piling cash into stocks, real estate and alternative investments, according to new survey figures.
Four fifths of the 201 panelists – who have $576bn (£379bn) under management – said they expected a Federal Reserve interest rate hike before the end of the year, the data from Bank of America Merrill Lynch’s (BOAML) fund manager survey reveals.
Confidence in the global economy rebounded led by a change in the outlook for China. Local fund managers turned “neutral” on the country’s growth outlook – their most positive reading in over a year. The investors said stocks in the Eurozone and Japan were the most attractive, due to some concern over the strength of the dollar which may hinder US companies.
A net 67 per cent expect the strong dollar to rise in value over the next year.
“While European equities are loved by global investors and the ECB has created some excitement about growth, sector positioning shows local asset managers are lacking conviction and hugging their benchmarks,” said Manish Kabra, head of European quantitative strategy at BOAML.
Michael Hartnett, chief investment strategist at BOAML Global Research, said: “With consensus very clustered in QE and strong dollar trades, asset price upside appears limited until an ‘event’ curtails the Fed hiking cycle, as in 1994.”