Global fund managers are underweight on equities, the month-to-month Bank of America (BofA) survey confirmed. The underweight positioning of fund managers is the best since May 2020 – a internet 15% underweight in June 2022, versus internet 13% chubby within the earlier month. Global inventory markets have been nervous in latest months with a number of headwinds forward together with price hikes, inflation, and provide chain bottlenecks. The fund supervisor’s survey confirmed that money ranges have dropped to five.6% from 6.1% however nonetheless stay excessive. It is necessary to notice that the BofA survey was held earlier than final week’s inflation figures have been launched.
So far this yr the Dow Jones is down 16% whereas India’s Nifty 50 has dived greater than 10%. BofA stated that the US inventory markets formally entered a bear market because the June BofA Fund Manager Survey indicators deeper investor distress. The survey added that Wall Street sentiment is dire.
Sector allocation tendencies
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In phrases of asset allocation, buyers are lengthy money, healthcare, commodities and vitality. On the opposite hand, they’re brief bonds, client discretionary, utilities, and equities. Month-on-month foundation, BofA survey confirmed that previously 4 weeks FMS buyers have elevated their allocation to bonds, Eurozone, EM, and expertise. “…at the same time rotating out of defensive sectors such as staples, healthcare, and utilities, and decreased cash.”
Despite the discount in money and improve in bond allocation, fund managers are nonetheless most bullish on money and most bearish on bonds. In phrases of areas, survey individuals highlighted that they’re bearish on equities from Japan, UK, EU, US, and EMs as effectively. “67% of FMS investors think oil will produce the best returns in 2022 (up from 56%),” the survey added.
Growth optimism weak
Further, the BofA survey confirmed that optimism about international development has fallen to a brand new low. “Net percentage of FMS investors expecting a stronger economy fell to -73%, lowest since 1994,” BofA stated. They anticipate inflation to be excessive over the subsequent 12 months, paving the way in which for stagflation. The concern of stagflation is the best since June 2008.
Accompanying the weak development optimism, fund managers additionally anticipate international revenue expectations to fall. With this in thoughts, buyers are rooting for firms to “play it safe”. “Investors want companies to strengthen their balance sheets (at 44% up from 41%, highest since Jan’21) rather than increase spending on capex or return cash to shareholders via buybacks,” they stated.
Source: www.financialexpress.com”