Institutional investors are warming to a market many now see as priced right, and an economy that they believe will be revived by corporate spending, even if unemployment fears keep consumers from opening their wallets.

According to Russell Research’s latest Investment Manager Outlook survey, which polled 180 fund managers in March, at 60%, a slim majority of fund managers now believe the market is fairly valued. Around the same proportion of managers, 57%, believed the market was undervalued a year ago, a bullish segment that has now dropped to 28%.

Erik Ogard, the director of Russell’s investment division for client investment strategies in North America and author of the report, said that this means many of the bargains are now over, but the fact that fund managers think stocks are fairly valued reflects their more optimistic view of the market.

Only 13% of fund managers believe the market is overvalued, and enthusiasm for cash positions has fallen to an all-time low. Treasuries are also off the love list, only 6% of fund managers see these bonds as a good investment right now.

Ogard said this is because Treasuries are too expensive; fixed income managers see more opportunity in investment grade and high yield bonds.

Fund managers are middling on what sectors of the market they expect to grow, aside from technology, which garnered a 79% preference rating. Sixty-three percent of managers also see an opportunity in the healthcare sector, while 49% rate materials and processing as a sector to watch.

Managers’ confidence in both consumer discretionary and consumer staples fell 2% from a year ago.

Part of fund managers’ relative pessimism regarding consumers is linked to their equally grim view of unemployment going forward. More than three-fourths of advisors think unemployment will still be above 8% by the end of next year, and 96% think it’ll be higher than 7%.

These results, Ogard said, indicate that fund managers expect those first green shoots to come from corporate spending, not from consumers.

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