According to the BofA-ML Fund Manager Survey for January, asset allocators assigning more funds to equities than at any time since February 2011, while their confidence in the world's economic outlook has reached its most positive level since April 2010.
Investors' appetite for risk in their portfolios is now at its highest in nine years, while an increasing number judge equities as undervalued -- particularly in Europe, the survey said.
Nearly half of the 254 survey participants said that they now expect to sell government bonds to fund purchases of riskier equities.
"Following the resolution of the US fiscal cliff, sentiment has surged," BofA Merrill Lynch Global Research chief investment strategist Michael Hartnett said.
Moreover, fund managers are also reducing their cash positions.
Investors have reduced cash holdings to 3.8 per cent from 4.2 per cent in December, indicating that fund managers are willing to hold riskier investment
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