Global fund managers are at their most bullish on equities in five years, a Merrill Lynch & Co. Inc. poll has found.

According to a March survey of 302 fund managers responsible for US$994 billion in assets, 68% reported holdings that were overweight in equities, up 1% from February. Only 9% of managers said they were underweight in equities.

The respondents showed the most favouritism toward eurozone and Japanese equities and the greatest dislike for U.S. stocks.

“This is the most bullish survey I have come across in how people see the world,” said David Bowers, chief global investment strategist, who said Merrill Lynch has been polling fund managers since 1999.

The survey also found that the managers have a pro-cyclical bent that “sits uncomfortably with a global economy that shows little sign of positive growth surprises,” said Bowers. “This is a textbook cyclical stance. People are looking for a growth surprise in no uncertain terms.”

Within economic sectors, managers were overindulging in energy and industrials holdings and bearish towards traditionally defensive categories like utilities. As well, 65% of the managers remained bearish on bonds, though less so than last month.

Some 45% of the fund managers said they expected the world economy to get a little or a lot stronger over the year, up from 35% in February.