Cash stand-off: Corporates vs. investorsWhile cash levels accumulate in investors’ portfolios, the Fund Manager Survey shows a new record number of investors demanding corporates put their cash to work in the real economy. The proportion of investors saying that companies are underinvesting has climbed to 69 percent, thereby eclipsing the record set one month ago of 67 percent. Furthermore the gap, or spread, between investors wanting corporate to increase capital expenditure (capex) rather than return cash to shareholders remains at a record high. Fifty-eight percent of investors want to see more capex, while 25 percent opt for dividends and buybacks – a spread of 33 percentage points. At the same time, nearly eight out of 10 investors are predicting below-trend growth over the coming year. The survey data indicates that investors will be more likely to commit cash when they see capex rising and stimulating economic growth. Trading places in investors’ hearts: Banks and emerging markets In the wake of the global financial crisis, banks were unloved and GEM were portfolio darlings. The reversal in sentiment between these two investments appears complete this month. While allocations to GEM reached a record low, allocations to banks by respondents to the global survey have reached a record high. A net 28 percent said they are overweight banks, a significant swing since January when a net 16 percent were overweight. One glimmer of hope for GEM is that the number of investors seeking to underweight the region in the coming year has eased slightly. A net 24 percent of global investors would like to underweight GEM in the next 12 months, down from a net 28 percent in January. European equities at fever pitch Optimism towards Europe has reached new highs. A net 40 percent of investors say that Europe is the region they most want to overweight. Europe has ranked as the most preferred region for six months. Belief continues to grow in Europe’s profit outlook. A net 12 percent of the global panel says that Europe is the region in which the profit outlook appears the most favorable, up from a net 8 percent a month ago.
Within Europe, a net 70 percent of respondents to the regional survey expect better profits in the year ahead – up from a net 59 percent last month. The number of European investors expecting double-digit earnings growth also increased.Fund Manager SurveyAn overall total of 222 panelists with US$591 billion of assets under management participated in the survey from 7 February to 13 February 2014. A total of 175 managers, managing US$456 billion, participated in the global survey. A total of 110 managers, managing US$249 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world. BofA Merrill Lynch Global ResearchThe BofA Merrill Lynch Global Research franchise covers more than 3,500 stocks and 1,150 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2013 by Institutional Investor magazine; No. 1 in the 2014 Institutional Investor All-Europe survey; No. 1 in the 2013 Institutional Investor All-Asia survey for the third consecutive year; No. 1 in the Institutional Investor 2013 Emerging Market & Fixed Income Survey; No. 2 in the 2013 Institutional Investor All-America survey; No. 2 in the All-Japan survey for the second consecutive year; No. 2 in the 2013 All-Latin America survey; and No. 2 in the 2013 All-China survey. The group was also named No. 2 in the 2013 Institutional Investor All-America Fixed Income survey for the second consecutive year; and No. 3 in the 2013 All-Europe Fixed Income Research survey. Bank of AmericaBank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 50 million consumer and small business relationships with approximately 5,100 retail banking offices and approximately 16,300 ATMs and award-winning online banking with 30 million active users and more than 14 million mobile users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
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