Active Fund Managers Are Focusing On Materials And Utilities, Shying Away From Telecom

For investors, active fund managers at Bank of America Merrill Lynch are focusing on materials and utilities, and are limiting their bets in telecom. BofA Merrill Lynch sees the biggest upticks in energy, discretionary and technology. In a BofA Merrill Lynch report released on Wednesday, small-cap core and value managers increased exposure the most to materials. The biggest relative increase was utilities in small-cap growth, while telecom saw the largest drop. "What's extreme? Financials get some love, energy loathed financials has moved from a chronic underweight to neutral, pushing it to a bullish extreme. Energy is still the most hated relative to history," comment BofA Merrill Lynch. BofA Merrill Lynch sees a mid-cap bubble in the making. "Mid-caps now trade near a record premium to large caps as large cap managers, pressured by consultants to increase active share ratios, and small-cap managers butting up against liquidity constraints, have converged into mid-caps. Other reasons cited for buying midcaps over large caps (dollar risk, M&A cycles) don't bear out empirically, and the pain trade in 2016 might be in mid-caps," BofA Merrill Lynch noted. Active fund managers at BofA Merrill Lynch think valuation will matter when paying up for growth. " Managers' holdings are now more expensive than their respective benchmarks on P/E and Price to Book. But 2016 could be different: profits are likely to accelerate which benefits Value," BofA Merrill Lynch commented. ETFs in the United States garnered $26.3 billion in net inflows over November. Utilities stock AGL Resources Inc.

has reached a new lifetime high. The stock has an average dollar-volume of $47.8 million. AGL Resources has a market cap of $7.6 billion. Shares are of AGL are up 15.2 percent year-to-date. AGL Resources is an energy services holding company, distributes natural gas to residential, commercial, industrial, and government clients in Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee, and Maryland.