Buy side ups defensive positions

Dec 13, 2011
<p>Most investors expect weaker growth next year and have cut exposure to cyclical stocks, reports survey of fund managers</p>

Investors have increased their positions in defensive sectors as they brace for a year of slow growth in 2012, according to the latest global survey of fund managers by Bank of America Merrill Lynch (BofAML).

The 190 institutional investors who took part boosted their holdings of pharmaceutical and staples over the last month, while cutting back on cyclical stocks.

Looking ahead to 2012, less than a third of respondents expect stronger economic growth next year.

‘Sector positioning remains defensive with healthcare the world’s most popular sector, followed by tech and staples, while the banks remain totally out of favor,’ comments Michael Harnett, chief global equity strategist at BofAML, in a statement.

Pharma in demand

A net 36 percent of respondents say they are overweight pharmaceuticals, up from 31 percent in the November survey, making it the most popular sector among respondents.

The sectors that lost out this month and saw investors cut their exposure include technology, industrials and discretionary.

Overall, investors increased their exposure to equities over the last month, although the only region to benefit from this move was the US.

Respondents report being a net 8 percent overweight equities, up from a net 5 percent underweight in November.  

US gains

Looking at specific regions, the number of investors overweight US stocks rose from a net 20 percent to a net 23 percent, but no other region recorded a gain.

Meanwhile, a net 23 percent of respondents are also overweight emerging market stocks, down from a net 27 percent last month.

‘Within equities, US and emerging markets remain the favored regions, while Europe continues to be deeply unloved,’ notes Harnett.

The investors who took part in the global survey manage a total of $608 bn in assets under management.

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