Investors have learned to stop worrying and love the eurozone again, according to a monthly poll by Bank of America Merrill Lynch.

The reason for the change is that fears of a eurozone implosion, while they haven’t vanished, have receded. The recent move by the European Central Bank to “do what it takes” to prevent a credit crisis via quantitative easing has reassured investors.

The BoA Merrill Lynch poll of investors with a total of $681 billion of assets, carried out from 7 to 13 September, showed asset allocators took an overweight position in eurozone equities for the first time since February 2011.

A net 1 per cent of global asset allocators (when underweight positions are subtracted) are overweight the region compared with a net 12 per cent underweight in August, the survey showed.

Three months in a row

For the first time since summer 2009, the survey has recorded three consecutive months of double-digit positive swings towards European equities. A net 9 per cent of global investors say that the eurozone is the region they most want to overweight in the coming 12 months, compared with a net 5 per cent nominating the region as their top prospective underweight in August.

By contrast, investors have turned nervous about the US market and the state of the country’s public finances, already proving to be a key theme in the run-up to the November presidential elections.

The proportion of fund managers who most fear EU sovereign risk fell to 33 per cent from 48 per cent in August. The US fiscal position has become the biggest “tail risk” for 35 per cent of global investors.

The share of asset allocators that are overweight US equities has fallen to a net 11 per cent from a net 13 per cent in August. Looking ahead, investors appear to see poor value in the US. A net 58 per cent identify US equities as the most overvalued globally (up from 51 per cent a month ago) while a net 43 per cent identify the eurozone as the most undervalued. This represents the greatest divergence between European and US valuations in the history of the survey, BoA Merrill Lynch said.

While investors moderately reduced their underweight positions in Japanese equities, evidence suggests sentiment is turning more bearish. A net 23 per cent of asset allocators are now underweight Japanese equities, from a net 25 per cent in the previous month. But a net 24 per cent of investors say Japan is the region they most want to underweight - double the level expressing that view in August.