text: Latest Coronavirus Watchlist Markets Investing Barron's Personal Finance Economy Retirement How to Invest Video Center Live Events MarketWatch Picks
  Account Settings
  Log In
  Sign Up
  Advertisement
  Advertisement
  Home
  FundWatch
  FundWatch
  U.S. gets dim marks by fund managers
  Published: June 18, 2002 at 12:00 p.m. ET
  By
  Justin Wiser
  , CBS.MarketWatch.com
  comments
  Merrill survey shows poor outlook for American stocks
  Email icon
  Facebook icon
  Twitter icon
  Linkedin icon
  Flipboard icon
  Print icon
  Resize icon
  NEW YORK (CBS.MW) -- The world's fund managers may see market conditions improving, but when it comes to U.S. stocks, they couldn't be much more pessimistic, a new survey shows.
  According to Merrill Lynch's latest monthly survey released on Tuesday, 60 percent of the world's fund managers say U.S. stocks are the most expensive in the world.
  About one-third of those polled said the nation has the least favorable outlook for corporate profits -- the worst of any region on the globe, including Japan. And 27 percent said the U.S. market has the worst quality of earnings behind only the long-suffering Japanese equities arena.
  Reflecting this sentiment, a net balance of 36 percent of the managers said they were now underweight U.S. stocks, compared with just 12 percent one month ago.
  "Europe offers better values, especially in the smaller-cap countries," said Ed Peters, chief investment officer at PanAgora Asset Management in Boston. "When the global economy is in recovery and the dollar is weak, usually the U.S. market underperforms."
  In addition to the Eurozone, emerging markets remains one of the favorite areas to overweight, according to the survey.
  Big picture
  On the brighter side, global equity valuations have become more attractive while managers' expectations for both future profits and interest rates remain unchanged.
  More than 70 percent of the 282 global fund managers polled said they expected double-digit earnings growth over the next 12 months.
  "The surprise this month is that earnings expectations have held up so well, despite all the talk of a double dip," said David Bowers, Merrill Lynch's chief global investment strategist.
  About three in four of the managers polled said they expected higher global equity prices one year from now, with 30 percent still hopeful of double-digit returns.
  Most managers also said they expected equities to beat bonds over the next year.
  Looking abroad
  Europe and the United Kingdom offer the best quality of earnings, and emerging markets are the most attractive in terms of valuation and the outlook for profits, investors said.
  "Japan is starting to look better, but we still see a lot of uncertainties there," Peters said.
  The euro was reported as the favorite currency going forward and the U.S. dollar as the least favorite. Despite recent weakness, the U.S. note is still overvalued, according to 57 percent of the managers polled.
  A majority of managers (58 percent) still prefers cyclical stocks over defensive equities. Basic materials, general industrials and financials were reported as the most popular sectors, and telecommunications, technology and utilities as the least popular.
  Looking beyond the next 12 months, managers said they expected average annual returns of 6.7 percent over the coming decade.
  Read Next
  Read Next
  Enron linked to California blackouts
  LOS ANGELES (CBS.MW) -- Two days of rolling blackouts in June 2000 that marked the beginning of California's energy crisis were directly caused by manipulative energy trading, according to a dozen former traders for Enron and its rivals.
  More On MarketWatch
  The value of your body parts
  2002 IPO market: It's like a salad
  Tough to see first IPO of 2003
  Four sites to track your bond prices
  Advertisement
  Community Guidelines • FAQs
  Advertisement
  Advertisement
  Advertisement
  Partner Center
  Advertisement
  Advertisement
  Advertisement
  Advertisement
  Advertisement
  Advertisement
  Most Popular
  Advertisement
  My late mother’s will was signed under ‘suspicious circumstances.’ My father ransacked $2M from her estate — he now lives with his much younger wife.
  ‘My girlfriend is a busy woman’: She told me to manage her investments and generate 10% returns — she got angry when I refused
  ‘Financially valuable versus socially valuable’: MacKenzie Scott declines to reveal who got money in her latest round of giving
  The ocean economy could reach $3 trillion by 2030. Here's what to know
  A couple who earns $220,000 a year with almost no debt thinks they never have enough — how can they see things differently?
  Advertisement
  Partner Content
  Partner Content
  Back to Top
  MarketWatch logoGo to the homepage
  Copyright © 2021 MarketWatch, Inc. All rights reserved.
  By using this site you agree to the Subscriber Agreement & Terms of Use,
  Privacy Notice, and Cookie Notice.
  Facebook
  Twitter
  Linkedin
  MarketWatch
  Customer Center
  Contact Us
  Newsroom Roster
  Virtual Stock Exchange
  BigCharts
  Copyright Policy
  Manage Notifications
  Company
  Dow Jones
  Code of Conduct
  Corrections
  Reprints & Licensing
  Your Ad Choices
  Corporate Subscriptions
  Dow Jones Network
  The Wall Street Journal
  Barron's
  Financial News London
  realtor.com
  Mansion Global
  Intraday Data provided by FACTSET and subject to terms of use. Historical and current end-of-day data provided by FACTSET. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.