Bonds Gain Fund Managers' Favor

The bond party might just be heating up, according to a recent survey of fund managers, thanks in large part to pessimism about global growth, concerns about future corporate earnings and this month's pause in interest rate hikes.

Fund managers are reassessing their long-standing negative view on bonds, according to Merrill Lynch's survey of fund managers for August, which was released Tuesday. Only 22% of fund managers perceive global bond markets to be overvalued, down from 35% in July.

Moreover, asset allocators have begun to reduce their underweight stance on bonds for the first time in three years, the survey said. Roughly 46% of the panel said they are underweight bonds, compared with 65% in June. ...