U.S. funds leave
portfolios unchanged in July; bullish on euro zone:
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[July 31, 2017]
By Shrutee Sarkar
(Reuters) - U.S. fund managers kept their
model global portfolio mostly unchanged in July but recommended an
increase to euro zone assets, citing stronger economic momentum in the
currency bloc, a Reuters poll showed on Monday.
Global equity allocations accounted for an average 57.0 percent from
57.3 percent in the previous month, with bonds at 34.6 percent versus
34.9 percent, according to the latest poll of 13 fund managers. The
remainder was spread between cash, property and alternative assets.
While recommended allocations to domestic assets remained more or less
the same, the suggested increase in exposure to euro zone equities and
bonds was the highest since at least March 2012.
The findings of the latest poll are in line with a separate Reuters
survey of economists published earlier in July, which showed
expectations for euro zone growth was strong and a reduction in policy
accommodation was in the pipeline [ECB/INT].
Euro zone economic sentiment rose for a third straight month in July to
a new 10-year high, largely because of a pick-up in services firms and
across all sectors. Confidence indicators were well above historical
The International Monetary Fund also raised its growth forecasts for the
euro zone last week, citing "solid momentum" in the economy.
"Markets took ECB President Draghi's comments on a strengthening
recovery as hints that the ECB may soon trim its bond-buying program.
The comments came amid sturdier euro zone manufacturing and multi year
highs in business and consumer confidence," said a fund manager at a
large investment firm.
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"We anticipate core inflation remaining well short of the ECB's 'below but close
to 2 percent' objective, but the solid growth momentum will likely allow the ECB
to taper and eventually end its purchases from early next year."
Regional breakdowns also showed recommendations were largely unchanged for other
major developed economies, even as fund managers expected the current momentum
in the global economy to continue.
"We expect the eight-year-old global economic expansion will continue to
strengthen and broaden for the remainder of 2017," noted the fund manager.
"Our outlook reflects several positive factors: generally supportive fiscal
policies - or expectations of them - in most developed market economies, easier
financial conditions since the start of the year, positive animal spirits as
indicated by consumer and business confidence data, and a rebound in global
Global wrap-up: [ASSET/WRAP]
Europe poll story: [EUR/ASSET]
UK poll story: [GB/ASSET]
Japan poll story: [JP/ASSET]
China poll story: [CN/ASSET]
(Polling by Rahul Karunakar and Indradip Ghosh, editing by Larry King)
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