According to the latest Investment Manager Outlook, a quarterly survey of U.S. investment managers conducted by Russell Investments, manager bullishness dropped 21 percentage points for non-U.S. (developed market) equities.      

Just 28% of the managers surveyed now believe the market to be undervalued, just half that said so in the March 2009 Investment Manager Outlook, though that is still an increase from the survey low of 19% seen in December 2009. The number of managers believing the markets to be overvalued declined from 18% in December 2009 to 13% in this survey.      

The two sectors most directly linked to consumer sentiment – consumer staples and consumer discretionary – account for two of the four sectors that managers liked the least. From last quarter, manager bullishness for consumer staples and consumer discretionary fell from 40% to 38% and from 38% to 36%, respectively. The announcement said those sectors more closely linked to business activity and economic growth are where managers are the most bullish, including technology (79%), materials and processing (49%), and energy (47%).       

Manager bullishness for health care increased seven percentage points from the December 2009 survey to 63%.       

Manager bullishness for cash fell from 9% to 6% from the last Investment Manager Outlook and reached a new all-time survey low. Similarly, bullishness for U.S. Treasuries fell from 8% to 6%, the second-lowest level for this asset class in survey history.       

“While the managers have not thrown themselves entirely into riskier investments, it is clear that cash and U.S. Treasuries are still priced too expensively to garner much interest,” said Erik Ogard, director, Client Investment Strategies at Russell Investments, in the press release. “This is especially true for those managers who see prospects for higher returns in other fixed income assets, such as investment grade and high yield corporate bonds.”