Allocations To EM Hit High - With No Sell Signal

October 2007 | Fund News

Merrill Lynch 's monthly fund manager survey has revealed the highest asset allocations to emerging markets among global fund managers since April 2004. According to the latest poll of 209 global managers, 51% believe that EM has the best profit outlook of any equity region, an all-time high. Signs this positive, says Michael Hartnett , Merrill's global EM equity strategist, can normally be interpreted as red flags: in the April and May following the 2004 high, emerging market equities tumbled 21%. Those looking for contrarian signals might also note that the shift into EM has come at the expense of Japanese and eurozone equity allocations. Yet in this case, other indicators of investor sentiment suggest that in this instance the contrarian view is wrong.

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