BofA fund manager survey shows rise in bearish bets

BofA fund manager survey shows rise in bearish bets

Bank of America’s Global Fund Manager Survey (FMS) for April showed that investors remain bearish since December last year as credit crunch caused a double dip in global growth and the highest bond allocation since March 2009.

Around 35% of those surveyed said the US Federal Reserve would start its easing cycle in the first quarter of 2024, while 28% expected it to be from Q4 of 2023.

Allocation to EM equities dropped 7 percentage points month-on-month to a net 30% overweight. EM equity allocation has declined 11 ppt since February 2023, the largest two-month decline since May 2022. Investors have been overweight on EM equities for five straight months, after having been underweight for most of 2022. Across all risk categories, EM risk has been rated as the least elevated.

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April FMS showed net 63% of investors expect a weaker economy, up 13 ppt M-o-M to the most pessimistic since December 2022. Economic growth expectations continue to hover near historical lows while the S&P 500 has yet to catch up with the weak macro outlook.

Investors were most overweight on bonds versus stocks since March 2009 and most bearish on real estate since July 2009. FMS cash levels held steady at 5.5%. Investors said gold was overvalued for the first time in 19 months.