A record number of fund managers think equities are overvalued, research shows.
Some 44% of those surveyed by BofA Merrill Lynch (BoAML) for its June Fund Manager Survey said stocks were expensive, the highest response in the history of the survey and it represents an increase from 37% the previous month.
The report showed that allocations to Eurozone equities were at historical highs at a time when 18% of fund managers considered European equities to be undervalued.
Ronan Carr, European equity strategist at BoAML, said: “With the allocation to Eurozone equities still near historical highs, the pause in performance may last a while longer.”
US equities were considered by the greatest majority of fund managers (84%) to be overvalued. Meanwhile, nearly half thought emerging market equities were undervalued.
“Market vulnerability to profit weakness is very high, with investors’ perception of excess valuation coinciding with high global profit expectations,” said Michael Hartnett, chief investment strategist and a co-author of the survey report.
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