Fund managers shift their focus away from returning cash to shareholders, according to new research
Investors want companies to spend more money on capital expenditure, according to the results of the December fund manager survey from Bank of America Merrill Lynch (BofAML).
The survey – which canvassed the opinions of 209 globally focused fund managers – asked what the respondents would most like to see companies do with their cash flow.
The highest proportion – 45 percent – say they are in favor of companies increasing capital expenditure, up from 39 percent in the previous month’s survey.
The findings mark a shift from last month’s survey, when a majority of respondents said they would like companies to return cash to shareholders.
This month only 30 percent say they want cash returned to investors, down from 45 percent in November.
Other results from the survey back up this change in sentiment: a net 62 percent of respondents this month say companies are under-investing in their businesses – the highest reading BofAML has ever recorded for this question.
The relative confidence of investors is shown by the fact that just 17 percent say they want cash spent on further balance sheet repair.
At the height of the financial crisis in late 2008, over two-thirds of BofAML survey respondents were calling for more focus on the balance sheet.
Corporate cash piles have risen steadily throughout 2010, leaving companies with the dilemma of what to do with their reserves.
