While they expect recovery in earnings and the overall economy to continue, global fund managers have slowly shifted toward more defensive strategies, according to survey results released Tuesday by Merrill Lynch.
Sixty-four percent of the 299 fund managers that filled out the February survey believe corporate profits will increase over the next 12 months, but that represents a 7% decrease from last month.
Consecutive months of weaker U.S. payroll numbers and commodity prices are seen as the reason for the slight downturn in expectations, according to Merrill chief strategist David Bowers.
While 33% of the fund managers said they weighed portfolios toward basic materials in January, only 15% said the same in February. While most of the managers thought the stock market was now at its mid-level phase, 22% thought it was already in the late stages of the cycle.
Bowers said the numbers simply point to an extension of the old cycle rather than a normal business cycle.