Hedgies Feeling Bullish, Survey Says

Apr 15 2010 | 10:17am ET

For hedge fund managers, the U.S. economy increasingly looks just right, according to a new survey.

More than seven in 10 managers think that corporate earnings will rise 10% or more over the next year, and the number of managers expecting both above-trend growth and below-trend inflation soared from 21% in March to 32% this month, according to the Bank of America Merrill Lynch Survey of Fund Managers. Indeed, fully 42% of respondents say there will be no Federal Reserve interest rate hikes this year at all, up from 38%.

“April’s survey shows a growing number of investors envisaging a Goldilocks scenario of above-trend growth and benign inflation,” Michael Hartnett, chief global equities strategist, said. “The findings are consistent with the view that the U.S. consumer, far from remaining in intensive care, is on the path back to good health.”

And so hedge funds are piling back into stocks, with 52% overweight equities, up from 33% in February. And average cash holdings have fallen, as well, from 3.8% last month to 3.5% this month.

Forty-two percent of hedge fund managers expect companies to increase their operating margins over the next year, up from 27%. One-quarter say payout ratios are too low, up from 20%, and only 23% say debt reduction should be a priority, the lowest level in more than a year.

BofA Merrill Lynch polled 197 fund managers with $546 billion in assets.


In Depth

Q&A: Rotation Capital's Rothfleisch On SPAC 2.0

Aug 11 2017 | 7:43pm ET

Corporate actions have long been a staple of event-driven investors, but activity...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Star Mountain: Private Lending in the Lower Middle-Market

Aug 14 2017 | 4:45pm ET

Private credit has become one of the most popular alternative asset classes in recent...

 

From the current issue of