Seven out of 10 money managers surveyed believe the world economy will improve within the next 12 months, and already, they are putting their money back to work in the stock market, as they are bullish on corporate profits, according to the Merrill Lynch survey of fund managers for May.

Average cash holdings have fallen to 4.3%, down from 4.9% in April. Although equities are still underweight in most fund managersÂ’ portfolios, they are edging back into them, especially cyclical sectors that are expected to perform best in a recovery. And, for the first time since August, professional investors are net underweight in bonds.

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