Quick Bites | Bank of America’s survey of global fund managers
January 19th, 2023 | Article
By: Paul Zwi
Recession fears have peaked.
Bank of America’s Global Research survey of global fund managers provides useful insights into prevailing thinking amongst industry professionals, and January’s survey results are no different.
Amongst the take-outs, a few points are shared below:
Participants in the January poll were “a lot less bearish” than in the fourth quarter, sparking rotation to emerging markets, Europe and cyclical stocks, and away from pharmaceuticals, technology and the US.
Investors are the most underweight US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions. Allocation to US equities “collapsed” during the first month of 2023, with investors net 39% underweight the asset class.
Strategists are warming to stocks globally amid optimism over cooling inflation and China’s reopening. European shares are extending their biggest outperformance on record versus the US amid cheap valuations, while emerging markets outpaced the S&P 500 this year, entering a bull market following a rally in Chinese shares.
Fund managers remain underweight global stocks overall in light of persisting risks to economic growth. They’re overweight cash and bonds with prospects of peaking inflation driving up expectations for lower short-term rates.
Participants said monetary policy is too restrictive for the first time since March 2020. They expect Federal Reserve rates to peak at 5% in the second quarter of 2023.
As a rule, one should be sceptical about “crowded trades”, and consensus narratives often turn out to be either wrong, too early or too late to the party. Surveys about fund managers should be seen for what they are: a reflection of a small group of people at a point in time who are probably reading and listening to the same sources, and subject to “herding” and “group-think”. Nevertheless, they are no doubt influential in markets and it’s worth understanding their views.
Disclaimer: Clime Asset Management Pty Limited | AFSL 221146 | ABN 72 098 420 770. The information provided in this post is intended for general use only. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information contained therein. Please consider the relevant disclosure document/s before investing in one of our products. Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Investors risk losing some or all of their capital invested. Past performance of financial products is not a reliable indicator of future performance or returns.
The information contained in this website and video presentations is of a general nature. It is not advice or a recommendation to invest in a financial product and constitutes general financial product advice only. The advice has been prepared without taking into account your objectives, financial situation or needs. You should, before acting on the advice, consider the appropriateness of the advice having regard to your objectives, financial situation and needs. Before making a decision about whether to acquire a financial product, you should obtain and consider the Product Disclosure Statement, Information Memorandum or Financial Services Guide. We encourage you to obtain professional advice before deciding to invest in a financial product.
Investment in securities and other financial products involves risk. An investment in a financial product may have the potential for capital growth and income but may also carry the risk that the total return on the investment may be less than the amount contributed directly by the investor. Investors risk losing some or all of their capital invested. Past performance is not a reliable indicator of future performance.