Investors binge on equities flirting with risk

According to the Bank of America-Merrill Lynch’s survey of fund managers for January, investors are increasingly putting in their cash reserves into equity markets and fewer are protecting themselves against a fall in stocks.

“Investors have rediscovered their risk appetite and are putting cash reserves to work across the equity markets,” the survey revealed.

For the first time since January, 2006, the survey shows investors are taking above average risk. The survey also said that net two per cent respondents were taking “higher than normal” risk in January this year, compared with a net seven per cent taking “below normal risk” in December.

Optimism in economy

These figures follow investors displaying optimism about the economy for several months, but maintaining a more “cautious” risk and investment profile.

“This survey is one of the more bullish (ones) we have seen and suggests that investors buy into the idea that this recovery has legs,” BofA-Merrill Lynch Global Research head of European equities strategy Gary Baker said.

 “Appetite for equities is strong. A net 52 per cent of asset allocators are overweight equities, up sharply from a net 37 per cent in December,” the survey added.

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