Fund managers expect Greek default

Financial Times
October 19, 2011

Fund managers overwhelmingly expect a Greek default, with almost three-quarters thinking it will happen by the first quarter of 2012, according to a survey by Bank of America Merrill Lynch.

But although investors continue to foresee weak global growth, market sentiment appears to have stabilised. The proportion of fund managers who expect a global recession in the next year retreated to a net 25 per cent, from a net 40 per cent in September.

“The rate of descent has bottomed out, both in terms of growth and risk”, said Gary Baker, head of European equities strategy at BofA Merrill Lynch Global Research.

“All you can say is that things have stopped getting worse.”

As in September’s survey, risk aversion drove asset allocation. Cash balances rose to 5 per cent from 4.9 per cent in the previous month, while for the first time since February 2009, both equities and commodities were underweight.

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