Institutional fund managers are optimistic about the global economy, but want to see the easing of European monetary policy, according to a new survey by Merrill Lynch.

More than half of the 268 fund managers surveyed globally said that they are optimistic about the outlook for the global economy. About 56% of the managers said they expect that the global real economy will develop positively over the next 12 months, up from just 40% last month.

Despite the global optimism, fund managers said that European monetary policy needed to be eased. A record number, 79%, of the Eurozone fund managers said that the European Central Bank’s monetary policy is too restrictive. This is up notably from 69% last month.

When asked where the ECB will be in six months, 46% said that it would be “behind the curve,” according to the survey.

The same institutional investors are keeping an eye on the possibility of a recession in Germany, according to the survey. More than 60% of Eurozone fund managers polled said that the probability of Germany falling into a recession is 30% or higher. Almost one in six of those questioned put the probability of a recession at 50% or more.

“Despite the summer doldrums, institutional investors are convinced that the market will move higher, ” said David Bowers, Merrill Lynch chief global investment strategist, and author of the study. “More fund managers than ever say they are passionate about equities and are getting ready to move out of a defensive position. ” Asked whether they thought the markets would be higher or lower in 12 months, 74% thought they would be higher and are expecting double digit returns

According to the survey, fund managers see a shift in investment style, with 46% saying growth investing will be the most successful, compared to 39% who think value investing will be best. The majority, 60%, think that large cap stocks will outperform, while 29% prefer small cap stocks.

The survey was conducted between August 3 and 9, with the help of Taylor Nelson Sofres.