Fiscal Cliff Tops Euro Crisis Among Tail Risks, BofA Says

Investors identified the U.S. fiscal cliff as the “top tail risk” in a September survey, according to Bank of America Corp.

Thirty-five percent of global investors listed the so- called fiscal cliff, which may prompt more than $600 billion in spending cuts and tax increases unless Congress acts, as the biggest risk. That exceeds the 33 percent who are most concerned with Europe’s sovereign-debt crisis, according to the BofA Merrill Lynch Fund Manager Survey for this month.

Pessimism about Europe is fading, with asset allocators taking an overweight position in euro-zone equities for the first time since February 2011, the bank said today in a report. A net 43 percent of investors said the euro area is the most undervalued region, compared with 58 percent that identified U.S. stocks as the most overvalued, the biggest such divergence ever recorded by the survey.

A net 24 percent of investors said Japan is the region they most want to underweight, double the level listed in August.

Tail risk refers to the outlying points, or tails, on bell- shaped curves that forecasters use to plot the probability of losses or gains in a given market.

Bank of America said it surveyed a total of 253 panelists overseeing $681 billion from Sept. 7 to Sept. 13.

To contact the reporter on this story: Charles Mead in New York at

To contact the editor responsible for this story: Alan Goldstein at

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