In its monthly survey of fund managers, interviewing 201 investors overseeing $586 billion in May, Merrill Lynch found that they are less concerned about corporate profits, The Wall Street Journal reports.

However, they are concerned about rising inflation.

In April, minus 32% of net respondents expected global corporate profits to rise, but in May, that lessened to minus 12%. However, 34% of net respondents said they expect inflation to rise, up from 27% in April, and 17% of net respondents said global monetary policy is too stimulative, up from 15% the month prior.

In addition, 29% of respondents expect short-term interest rates will be higher within 12 months, up from 12% in April.

 “With every silver lining comes a cloud, and with expectations of stronger growth comes the fear that global core inflation is set to rise,” said David Bowers, an independent consultant to Merrill. “The spectre of higher interest rates and inflation has not shaken asset allocators from their conviction that equities are fairly priced,” Bowers added.

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