Fund managers across the globe are more than the worry covid-19 pandemic, according to Bank of America’s (BofA) current fund manager survey. Among the 194 fund managers surveyed by the international investment bank, as a lot of as 35% of the respondents think inflation is now once again the most significant danger for markets. Meanwhile, only 9% think covid-19 to be the most significant tail danger for investors. Although inflation is seen as a danger, 69% of the respondents continue to stay bullish and anticipate an above-trend development accompanying their expectation of above-trend inflation.
The bullish bias of fund managers is reflected nicely in the low money levels they have been sitting on. BofA showed that money levels are as low as 4.1%, implying that most of the investable dollars accessible has been invested. On-month basis, investors have moved towards late cyclicals such as power. Stapes, REITs, banks, utilities, and supplies have also seen a positive alter in terms of investor positioning, according to the survey. On the other hand, Emerging markets, technologies, and commodities have seen a unfavorable trend. Allocation towards the technologies sector is the third-lowest considering the fact that 2006.
With US equities reaching fresh highs repeatedly, fund managers continue to back the S&P 500. 29% of the respondents think S&P500 will outperform in 2021, down slightly from the prior month. Meanwhile, for bond yields, fund managers are of the view that when yields close to 2%, stock markets could witness a correction.
Further, the survey showed that fund managers have aligned their portfolios towards stocks with higher-high-quality earnings and these with higher-high-quality dividends. Smallcaps appear to be losing their shine, with only 14% favouring them in May, as against 35% in March this year. Meanwhile, worth continued to stay the most favoured trade. “48% of FMS investors think value will outperform growth in the next 12 months. It continues to be the most favoured factor in the last 6 months with the exception of small-cap in February 2021,” BofA stated.
Catching up on the current euphoria about cryptocurrencies, as a lot of as 43% of the fund managers stated that ‘Long Bitcoin’ has overtaken ‘Long Tech’ as the most crowded trade. However, considering the fact that the survey, Bitcoin has tumbled at least 18%. Technology has moved to the second spot, followed by Long ESG, and then quick US treasuries.