Fund managers 'rewriting rules' for new investment cycle.

Investment Adviser, June, 2009

Byline: James Kenny

As the early signs of a recovery begin to take shape, optimistic investors are moving their portfolios increasingly into emerging markets, according to the latest Merrill Lynch fund manager survey.

June's survey of more than 220 managers found that, while many respondents believe a recovery is on the horizon, many others are now "rewriting the rules" for positioning their portfolios at the start of a new investment cycle.

At the beginning of a cycle, the report said, managers tend to move into more defensive cyclical stocks, such as consumer discretionary.

Yet many of the survey's respondents said they were now moving into countries such as China, basing their strategy around optimism over the economy's growth...

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