Quick Bites | Bank of America’s survey of global fund managers

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:


  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.


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