Fifty-seven percent of money managers view the market as undervalued, Russell Investments found in its latest survey, of 170 senior-level managers. This is the second-highest percentage in survey history. Only 7% of managers believe markets are overvalued.

“With more conviction that at any point since the depths of the global credit crisis, managers now believe the market to be undervalued,” said Mark Eibel, director of client investment strategies at Russell. “The most positive managers may be holding out hope that a tidal change is beginning to gather momentum, one built on strong corporate earnings and a recovering economy.”

The main driver of growth over the next 12 months will be capital spending on equipment and construction, 49% said. Eighteen percent cited government spending and investment as the main driver and 15% pointed to personal consumption.

The sector managers are most bullish on is technology, mentioned by 69%, followed by energy (51%) and materials and processing (48%).

Noting that only 9% do not expect any growth over the next 12 months, Eibel said this “is at odds with the broad speculation around a looming double-dip recession. Uncertainty led many businesses to delay expenditures in 2008 and 2009, but the managers now expect that spending to come. The question that remains is how robust the spending will be.”

Eibel added: “Managers are positioning themselves for economic growth. Their sector preferences align with their view that over the next year, capital spending will be a significant component of a slow-growth economy.”

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