Global fund managers fear inflation more than covid-19; remain bullish on growth expectations


With US equities reaching fresh highs repeatedly, fund managers continue to back the S&P 500.
(Image: REUTERS)

Fund managers across the globe are over the fear covid-19 pandemic, according to Bank of America’s (BofA) recent fund manager survey. Among the 194 fund managers surveyed by the global investment bank, as many as 35% of the respondents believe inflation is now again the biggest risk for markets. Meanwhile, only 9% believe covid-19 to be the biggest tail risk for investors. Although inflation is seen as a risk, 69% of the respondents continue to remain bullish and expect an above-trend growth accompanying their expectation of above-trend inflation. 

The bullish bias of fund managers is reflected well in the low cash levels they have been sitting on. BofA showed that cash levels are as low as 4.1%, implying that most of the investable money available has been invested. On-month basis, investors have moved towards late cyclicals such as energy. Stapes, REITs, banks, utilities, and materials have also seen a positive change in terms of investor positioning, according to the survey. On the other hand, Emerging markets, technology, and commodities have seen a negative trend. Allocation towards the technology sector is the third-lowest since 2006.

With US equities reaching fresh highs repeatedly, fund managers continue to back the S&P 500. 29% of the respondents believe S&P500 will outperform in 2021, down slightly from the previous month. Meanwhile, for bond yields, fund managers are of the view that when yields near 2%, stock markets could witness a correction.

Further, the survey showed that fund managers have aligned their portfolios towards stocks with high-quality earnings and those with high-quality dividends. Smallcaps seem to be losing their shine, with only 14% favouring them in May, as against 35% in March this year. Meanwhile, value continued to remain 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 said. 

Catching up on the recent euphoria around cryptocurrencies, as many as 43% of the fund managers said that ‘Long Bitcoin’ has overtaken ‘Long Tech’ as the most crowded trade. However, since the survey, Bitcoin has tumbled at least 18%. Technology has moved to the second spot, followed by Long ESG, and then short US treasuries.

Looking to invest in US Stocks? Open a free account with Stockal – India’s first borderless investment platform.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



Source link

Latest

Online Identity Theft: Learn How To Combat It

Identity can be physical or virtual, which means a person has a unique figure both in real life and on the web. Virtual...

How to Choose a Senior Living Community and benefits

Choosing a senior living community is a choice that can feel overwhelming at times. There are a lot of factors that should be considered...

HDFC Bank hopes to return with a ‘bang’ and regain lost market share

Laying out future plans, once the embargo is lifted, he said the bank had a much more wholesome strategy.HDFC Bank expects to regain...

Some Reasons Why Entrümpelung Services for Companies Near Me Are Important?

In Paderborn, health centers and auto solution stations are required to accumulate and also reuse specific things. Road occasions, in specific, must manage the...

Covid-19: Daily cases fall, but meaningful rebound still some distance away

Unfortunately, agriculture cannot pull the economy out of the trough.With the daily case count falling to below 1 lakh, the pace of vaccinations...