Merrill Lynch Fund Managers Survey

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Includes: BDD, BDG, BOM, BOS, DBB, HEVY, JJM, RGRI, RJZ, UBM
by: The Atlas Investor

Today's chart of the day focuses on sentiment in the basic materials sector. Regular readers of the blog already know that I have been closely following Merrill Lynch's Fund Manager Survey for years now. This month's survey was conducted in a period between 2nd to 9th April 2015 with a total of 177 panelists with $494 billion of assets under management. The survey should be used as a very good contrarian indicator.

Chart Of The Day: Fund managers continue to be underweight miners

Source: Merrill Lynch Research

According to the recent survey, global fund manager allocation towards global materials declined sharply in the month of April to net 27% underweight from net 16% underweight the previous month. As we can clearly see from today's chart of the day, sentiment is very depressed right now. Merrill Lynch states that the current allocation is 1.8 standard deviation below its long-term average.

Furthermore, the overall commodity and natural resources theme is very much disliked by global money managers. Commodity allocation is unchanged for the third straight month and remains at net 20% underweight. That is 1.2 standard deviations below its long-term average and even more interestingly, fund managers remain underweight commodities for the 28th month in the row.

A net 33% of investors think oil is undervalued, while allocation to global energy equities has fallen to a record low net 27% underweight. Merrill Lynch states that is 2.6 standard deviations below its long-term average. One of the main culprits is the US Dollar rally, which we have been monitoring closely on the blog. In the month of April, a net 13% think USD overvalued, while the Euro appears undervalued the most since April 2003.

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