Interactive Investor

Professional investors haven’t been this bullish about shares since 2013

In terms of inflation, most investors are still ‘team transitory’.

18th November 2021 10:42

by Tom Bailey from interactive investor

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In terms of inflation, most investors are still ‘team transitory’. 

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Investors are more bullish about US shares than they have been in more than eight years, according to the latest Bank of America Merrill Lynch Global Fund Manager Survey.

The survey found that global fund managers were overweight US shares by more than they have been since August 2013. Allocation to US equities grew by 13 percentage points month-on-month, with fund managers net 29% overweight.

However, the latest survey also showed fund managers expecting emerging market shares to be the best-performing assets in 2022, outperforming even the S&P 500 and bitcoin. Despite this, most fund managers were net underweight emerging market shares.

In terms of global growth expectations, investors were more bullish in November compared to the previous month, albeit still divided on the outlook. A net 3% said they expected global economic growth to improve. In October, that stood at -6%. However, it is still way below the peak in March 2021 when a net 91% of fund managers expected growth to pick up.

There has also been a slight recovery in global profit expectations. Net 6% of fund managers said they expected global profits to increase, up by net -15% last month.

In terms of inflation, most investors are still “team transitory”. The survey showed that 61% expected the recent uptick in inflation to subside. In contrast, 35% said they expected it to be permanent. However, despite most of those surveyed expecting inflation to be transitory, price rises were still the risk most commonly cited by investors, as it has been since March 2021.

Fund managers also continued to believe that tech stocks were the most-crowded trade in markets. That has been the case since June 2021.

The second most-cited “crowded trade” in the survey was bitcoin, followed by environmental, social and governance (ESG) assets.

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